October 10, 2000

INTEGRATED BAR OF THE PHILIPPINES, Represented by its National President, Jose Aguila Grapilon,petitioners,vs.JOSEPH EJERCITO ESTRADA, in his capacity as President, Republic of the Philippines, and HON. DOMINGO SIAZON, in his capacity as Secretary of Foreign Affairs, respondents.x-----------------------xG.R. No. 138698

October 10, 2000

JOVITO R. SALONGA, WIGBERTO TAADA, ZENAIDA QUEZON-AVENCEA, ROLANDO SIMBULAN, PABLITO V. SANIDAD, MA. SOCORRO I. DIOKNO, AGAPITO A. AQUINO,JOKER P. ARROYO, FRANCISCO C. RIVERA JR., RENE A.V. SAGUISAG, KILOSBAYAN, MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.(MABINI), petitioners,vs.THE EXECUTIVE SECRETARY, THE SECRETARY OF FOREIGN AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE, SENATE PRESIDENT MARCELO B. FERNAN, SENATORBLAS F. OPLE, SENATOR RODOLFO G. BIAZON, AND ALL OTHER PERSONS ACTING THEIR CONTROL, SUPERVISION, DIRECTION, AND INSTRUCTION IN RELATION TO THEVISITING FORCES AGREEMENT (VFA), respondents.DECISIONBUENA, J.:Confronting the Court for resolution in the instant consolidated petitions for certiorari and prohibition are issues relating to, and borne by, an agreement forged in the turn of the last centurybetween the Republic of the Philippines and the United States of America -the Visiting Forces Agreement.The antecedents unfold.On March 14, 1947, the Philippines and the United States of America forged a Military Bases Agreement which formalized, among others, the use of installations in the Philippine territory byUnited States military personnel. To further strengthen their defense and security relationship, the Philippines and the United States entered into a Mutual Defense Treaty on August 30, 1951.Under the treaty, the parties agreed to respond to any external armed attack on their territory, armed forces, public vessels, and aircraft. 1In view of the impending expiration of the RP-US Military Bases Agreement in 1991, the Philippines and the United States negotiated for a possible extension of the military bases agreement.On September 16, 1991, the Philippine Senate rejected the proposed RP-US Treaty of Friendship, Cooperation and Security which, in effect, would have extended the presence of US militarybases in the Philippines.2 With the expiration of the RP-US Military Bases Agreement, the periodic military exercises conducted between the two countries were held in abeyance.Notwithstanding, the defense and security relationship between the Philippines and the United States of America continued pursuant to the Mutual Defense Treaty.

On July 18, 1997, the United States panel, headed by US Defense Deputy Assistant Secretary for Asia Pacific Kurt Campbell, met with the Philippine panel, headed by Foreign AffairsUndersecretary Rodolfo Severino Jr., to exchange notes on "the complementing strategic interests of the United States and the Philippines in the Asia-Pacific region." Both sides discussed,among other things, the possible elements of the Visiting Forces Agreement (VFA for brevity). Negotiations by both panels on the VFA led to a consolidated draft text, which in turn resulted to afinal series of conferences and negotiations 3 that culminated in Manila on January 12 and 13, 1998. Thereafter, then President Fidel V. Ramos approved the VFA, which was respectivelysigned by public respondent Secretary Siazon and Unites States Ambassador Thomas Hubbard on February 10, 1998.On October 5, 1998, President Joseph E. Estrada, through respondent Secretary of Foreign Affairs, ratified the VFA. 4On October 6, 1998, the President, acting through respondent Executive Secretary Ronaldo Zamora, officially transmitted to the Senate of the Philippines, 5 the Instrument of Ratification, theletter of the President6 and the VFA, for concurrence pursuant to Section 21, Article VII of the 1987 Constitution. The Senate, in turn, referred the VFA to its Committee on Foreign Relations,chaired by Senator Blas F. Ople, and its Committee on National Defense and Security, chaired by Senator Rodolfo G. Biazon, for their joint consideration and recommendation. Thereafter, jointpublic hearings were held by the two Committees.7On May 3, 1999, the Committees submitted Proposed Senate Resolution No. 443 8 recommending the concurrence of the Senate to the VFA and the creation of a Legislative OversightCommittee to oversee its implementation. Debates then ensued.On May 27, 1999, Proposed Senate Resolution No. 443 was approved by the Senate, by a two-thirds (2/3) vote 9of its members. Senate Resolution No. 443 was then re-numbered as SenateResolution No. 18.10On June 1, 1999, the VFA officially entered into force after an Exchange of Notes between respondent Secretary Siazon and United States Ambassador Hubbard.The VFA, which consists of a Preamble and nine (9) Articles, provides for the mechanism for regulating the circumstances and conditions under which US Armed Forces and defensepersonnel may be present in the Philippines, and is quoted in its full text, hereunder:"ArticleDefinitions

"As used in this Agreement, United States personnel means United States military and civilian personnel temporarily in the Philippines in connection with activities approved by the PhilippineGovernment."Within this definition:"1. The term military personnel refers to military members of the United States Army, Navy, Marine Corps, Air Force, and Coast Guard."2. The term civilian personnel refers to individuals who are neither nationals of, nor ordinary residents in the Philippines and who are employed by the United States armedforces or who are accompanying the United States armed forces, such as employees of the American Red Cross and the United Services Organization."ArticleRespect for Law

II

"It is the duty of the United States personnel to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of this agreement, and, inparticular, from any political activity in the Philippines. The Government of the United States shall take all measures within its authority to ensure that this is done."ArticleEntry and Departure

III

"1. The Government of the Philippines shall facilitate the admission of United States personnel and their departure from the Philippines in connection with activities covered by thisagreement."2. United States military personnel shall be exempt from passport and visa regulations upon entering and departing the Philippines."3. The following documents only, which shall be presented on demand, shall be required in respect of United States military personnel who enter the Philippines:"(a) personal identity card issued by the appropriate United States authority showing full name, date of birth, rank or grade and service number (if any), branch ofservice and photograph;"(b) individual or collective document issued by the appropriate United States authority, authorizing the travel or visit and identifying the individual or group as UnitedStates military personnel; and"(c) the commanding officer of a military aircraft or vessel shall present a declaration of health, and when required by the cognizant representative of the Governmentof the Philippines, shall conduct a quarantine inspection and will certify that the aircraft or vessel is free from quarantinable diseases. Any quarantine inspection ofUnited States aircraft or United States vessels or cargoes thereon shall be conducted by the United States commanding officer in accordance with the internationalhealth regulations as promulgated by the World Health Organization, and mutually agreed procedures."4. United States civilian personnel shall be exempt from visa requirements but shall present, upon demand, valid passports upon entry and departure of the Philippines.

"5. If the Government of the Philippines has requested the removal of any United States personnel from its territory, the United States authorities shall be responsible for receivingthe person concerned within its own territory or otherwise disposing of said person outside of the Philippines."Article IVDriving and Vehicle Registration"1. Philippine authorities shall accept as valid, without test or fee, a driving permit or license issued by the appropriate United States authority to United States personnel for theoperation of military or official vehicles."2. Vehicles owned by the Government of the United States need not be registered, but shall have appropriate markings."ArticleCriminal Jurisdiction

"1. Subject to the provisions of this article:

(a) Philippine authorities shall have jurisdiction over United States personnel with respect to offenses committed within the Philippines and punishable under the law of thePhilippines.(b) United States military authorities shall have the right to exercise within the Philippines all criminal and disciplinary jurisdiction conferred on them by the military law of the UnitedStates over United States personnel in the Philippines."2. (a) Philippine authorities exercise exclusive jurisdiction over United States personnel with respect to offenses, including offenses relating to the security of the Philippines, punishable underthe laws of the Philippines, but not under the laws of the United States.(b) United States authorities exercise exclusive jurisdiction over United States personnel with respect to offenses, including offenses relating to the security of the United States,punishable under the laws of the United States, but not under the laws of the Philippines.(c) For the purposes of this paragraph and paragraph 3 of this article, an offense relating to security means:(1) treason;(2) sabotage, espionage or violation of any law relating to national defense."3. In cases where the right to exercise jurisdiction is concurrent, the following rules shall apply:(a) Philippine authorities shall have the primary right to exercise jurisdiction over all offenses committed by United States personnel, except in cases provided for in paragraphs1(b), 2 (b), and 3 (b) of this Article.(b) United States military authorities shall have the primary right to exercise jurisdiction over United States personnel subject to the military law of the United States in relation to.(1) offenses solely against the property or security of the United States or offenses solely against the property or person of United States personnel; and(2) offenses arising out of any act or omission done in performance of official duty.(c) The authorities of either government may request the authorities of the other government to waive their primary right to exercise jurisdiction in a particular case.(d) Recognizing the responsibility of the United States military authorities to maintain good order and discipline among their forces, Philippine authorities will, uponrequest by the United States, waive their primary right to exercise jurisdiction except in cases of particular importance to the Philippines. If the Government of thePhilippines determines that the case is of particular importance, it shall communicate such determination to the United States authorities within twenty (20) days afterthe Philippine authorities receive the United States request.(e) When the United States military commander determines that an offense charged by authorities of the Philippines against United states personnel arises out of anact or omission done in the performance of official duty, the commander will issue a certificate setting forth such determination. This certificate will be transmitted to theappropriate authorities of the Philippines and will constitute sufficient proof of performance of official duty for the purposes of paragraph 3(b)(2) of this Article. In thosecases where the Government of the Philippines believes the circumstances of the case require a review of the duty certificate, United States military authorities andPhilippine authorities shall consult immediately. Philippine authorities at the highest levels may also present any information bearing on its validity. United Statesmilitary authorities shall take full account of the Philippine position. Where appropriate, United States military authorities will take disciplinary or other action againstoffenders in official duty cases, and notify the Government of the Philippines of the actions taken.(f) If the government having the primary right does not exercise jurisdiction, it shall notify the authorities of the other government as soon as possible.

(g) The authorities of the Philippines and the United States shall notify each other of the disposition of all cases in which both the authorities of the Philippines and theUnited States have the right to exercise jurisdiction."4. Within the scope of their legal competence, the authorities of the Philippines and United States shall assist each other in the arrest of United States personnel in the Philippines and inhandling them over to authorities who are to exercise jurisdiction in accordance with the provisions of this article."5. United States military authorities shall promptly notify Philippine authorities of the arrest or detention of United States personnel who are subject of Philippine primary or exclusivejurisdiction. Philippine authorities shall promptly notify United States military authorities of the arrest or detention of any United States personnel."6. The custody of any United States personnel over whom the Philippines is to exercise jurisdiction shall immediately reside with United States military authorities, if they so request, from thecommission of the offense until completion of all judicial proceedings. United States military authorities shall, upon formal notification by the Philippine authorities and without delay, make suchpersonnel available to those authorities in time for any investigative or judicial proceedings relating to the offense with which the person has been charged in extraordinary cases, the PhilippineGovernment shall present its position to the United States Government regarding custody, which the United States Government shall take into full account. In the event Philippine judicialproceedings are not completed within one year, the United States shall be relieved of any obligations under this paragraph. The one-year period will not include the time necessary to appeal.Also, the one-year period will not include any time during which scheduled trial procedures are delayed because United States authorities, after timely notification by Philippine authorities toarrange for the presence of the accused, fail to do so."7. Within the scope of their legal authority, United States and Philippine authorities shall assist each other in the carrying out of all necessary investigation into offenses and shall cooperate inproviding for the attendance of witnesses and in the collection and production of evidence, including seizure and, in proper cases, the delivery of objects connected with an offense."8. When United States personnel have been tried in accordance with the provisions of this Article and have been acquitted or have been convicted and are serving, or have served theirsentence, or have had their sentence remitted or suspended, or have been pardoned, they may not be tried again for the same offense in the Philippines. Nothing in this paragraph, however,shall prevent United States military authorities from trying United States personnel for any violation of rules of discipline arising from the act or omission which constituted an offense for whichthey were tried by Philippine authorities."9. When United States personnel are detained, taken into custody, or prosecuted by Philippine authorities, they shall be accorded all procedural safeguards established by the law of thePhilippines. At the minimum, United States personnel shall be entitled:(a) To a prompt and speedy trial;(b) To be informed in advance of trial of the specific charge or charges made against them and to have reasonable time to prepare a defense;(c) To be confronted with witnesses against them and to cross examine such witnesses;(d) To present evidence in their defense and to have compulsory process for obtaining witnesses;(e) To have free and assisted legal representation of their own choice on the same basis as nationals of the Philippines;(f) To have the service of a competent interpreter; and(g) To communicate promptly with and to be visited regularly by United States authorities, and to have such authorities present at all judicial proceedings. These proceedings shallbe public unless the court, in accordance with Philippine laws, excludes persons who have no role in the proceedings."10. The confinement or detention by Philippine authorities of United States personnel shall be carried out in facilities agreed on by appropriate Philippine and United States authorities. UnitedStates Personnel serving sentences in the Philippines shall have the right to visits and material assistance."11. United States personnel shall be subject to trial only in Philippine courts of ordinary jurisdiction, and shall not be subject to the jurisdiction of Philippine military or religious courts."Article VIClaims"1. Except for contractual arrangements, including United States foreign military sales letters of offer and acceptance and leases of military equipment, both governments waiveany and all claims against each other for damage, loss or destruction to property of each others armed forces or for death or injury to their military and civilian personnel arisingfrom activities to which this agreement applies."2. For claims against the United States, other than contractual claims and those to which paragraph 1 applies, the United States Government, in accordance with United Stateslaw regarding foreign claims, will pay just and reasonable compensation in settlement of meritorious claims for damage, loss, personal injury or death, caused by acts or omissionsof United States personnel, or otherwise incident to the non-combat activities of the United States forces."Article VIIImportation and Exportation"1. United States Government equipment, materials, supplies, and other property imported into or acquired in the Philippines by or on behalf of the United States armed forces inconnection with activities to which this agreement applies, shall be free of all Philippine duties, taxes and other similar charges. Title to such property shall remain with the UnitedStates, which may remove such property from the Philippines at any time, free from export duties, taxes, and other similar charges. The exemptions provided in this paragraphshall also extend to any duty, tax, or other similar charges which would otherwise be assessed upon such property after importation into, or acquisition within, the Philippines. Such

property may be removed from the Philippines, or disposed of therein, provided that disposition of such property in the Philippines to persons or entities not entitled to exemptionfrom applicable taxes and duties shall be subject to payment of such taxes, and duties and prior approval of the Philippine Government."2. Reasonable quantities of personal baggage, personal effects, and other property for the personal use of United States personnel may be imported into and used in thePhilippines free of all duties, taxes and other similar charges during the period of their temporary stay in the Philippines. Transfers to persons or entities in the Philippines notentitled to import privileges may only be made upon prior approval of the appropriate Philippine authorities including payment by the recipient of applicable duties and taxesimposed in accordance with the laws of the Philippines. The exportation of such property and of property acquired in the Philippines by United States personnel shall be free of allPhilippine duties, taxes, and other similar charges."Article VIIIMovement of Vessels and Aircraft"1. Aircraft operated by or for the United States armed forces may enter the Philippines upon approval of the Government of the Philippines in accordance with procedures stipulated inimplementing arrangements."2. Vessels operated by or for the United States armed forces may enter the Philippines upon approval of the Government of the Philippines. The movement of vessels shall be inaccordance with international custom and practice governing such vessels, and such agreed implementing arrangements as necessary."3. Vehicles, vessels, and aircraft operated by or for the United States armed forces shall not be subject to the payment of landing or port fees, navigation or over flight charges, or tollsor other use charges, including light and harbor dues, while in the Philippines. Aircraft operated by or for the United States armed forces shall observe local air traffic control regulationswhile in the Philippines. Vessels owned or operated by the United States solely on United States Government non-commercial service shall not be subject to compulsory pilotage atPhilippine ports."Article IXDuration and Termination"This agreement shall enter into force on the date on which the parties have notified each other in writing through the diplomatic channel that they have completed their constitutionalrequirements for entry into force. This agreement shall remain in force until the expiration of 180 days from the date on which either party gives the other party notice in writing that it desires toterminate the agreement."Via these consolidated11 petitions for certiorari and prohibition, petitioners - as legislators, non-governmental organizations, citizens and taxpayers - assail the constitutionality of the VFA andimpute to herein respondents grave abuse of discretion in ratifying the agreement.We have simplified the issues raised by the petitioners into the following:IDo petitioners have legal standing as concerned citizens, taxpayers, or legislators to question the constitutionality of the VFA?IIIs the VFA governed by the provisions of Section 21, Article VII or of Section 25, Article XVIII of the Constitution?IIIDoes the VFA constitute an abdication of Philippine sovereignty?a. Are Philippine courts deprived of their jurisdiction to hear and try offenses committed by US military personnel?b. Is the Supreme Court deprived of its jurisdiction over offenses punishable by reclusion perpetua or higher?IVDoes the VFA violate:a. the equal protection clause under Section 1, Article III of the Constitution?b. the Prohibition against nuclear weapons under Article II, Section 8?c. Section 28 (4), Article VI of the Constitution granting the exemption from taxes and duties for the equipment, materials supplies and other properties imported into or acquired inthe Philippines by, or on behalf, of the US Armed Forces?LOCUS STANDI

At the outset, respondents challenge petitioners standing to sue, on the ground that the latter have not shown any interest in the case, and that petitioners failed to substantiate that they havesustained, or will sustain direct injury as a result of the operation of the VFA. 12 Petitioners, on the other hand, counter that the validity or invalidity of the VFA is a matter of transcendentalimportance which justifies their standing.13A party bringing a suit challenging the constitutionality of a law, act, or statute must show "not only that the law is invalid, but also that he has sustained or in is in immediate, or imminentdanger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way." He must show that he has been, or is about to be, deniedsome right or privilege to which he is lawfully entitled, or that he is about to be subjected to some burdens or penalties by reason of the statute complained of. 14In the case before us, petitioners failed to show, to the satisfaction of this Court, that they have sustained, or are in danger of sustaining any direct injury as a result of the enforcement of theVFA. As taxpayers, petitioners have not established that the VFA involves the exercise by Congress of its taxing or spending powers. 15 On this point, it bears stressing that a taxpayers suitrefers to a case where the act complained of directly involves the illegal disbursement of public funds derived from taxation. 16 Thus, in Bugnay Const. & Devt Corp. vs. Laron17 , we held:"x x x it is exigent that the taxpayer-plaintiff sufficiently show that he would be benefited or injured by the judgment or entitled to the avails of the suit as a real party in interest. Before he caninvoke the power of judicial review, he must specifically prove that he has sufficient interest in preventing the illegal expenditure of money raised by taxation and that he will sustain a directinjury as a result of the enforcement of the questioned statute or contract. It is not sufficient that he has merely a general interest common to all members of the public."Clearly, inasmuch as no public funds raised by taxation are involved in this case, and in the absence of any allegation by petitioners that public funds are being misspent or illegally expended,petitioners, as taxpayers, have no legal standing to assail the legality of the VFA.Similarly, Representatives Wigberto Taada, Agapito Aquino and Joker Arroyo, as petitioners-legislators, do not possess the requisite locus standi to maintain the present suit. While this Court,in Phil. Constitution Association vs. Hon. Salvador Enriquez,18 sustained the legal standing of a member of the Senate and the House of Representatives to question the validity of apresidential veto or a condition imposed on an item in an appropriation bull, we cannot, at this instance, similarly uphold petitioners standing as members of Congress, in the absence of aclear showing of any direct injury to their person or to the institution to which they belong.Beyond this, the allegations of impairment of legislative power, such as the delegation of the power of Congress to grant tax exemptions, are more apparent than real. While it may be true thatpetitioners pointed to provisions of the VFA which allegedly impair their legislative powers, petitioners failed however to sufficiently show that they have in fact suffered direct injury.In the same vein, petitioner Integrated Bar of the Philippines (IBP) is stripped of standing in these cases. As aptly observed by the Solicitor General, the IBP lacks the legal capacity to bringthis suit in the absence of a board resolution from its Board of Governors authorizing its National President to commence the present action. 19Notwithstanding, in view of the paramount importance and the constitutional significance of the issues raised in the petitions, this Court, in the exercise of its sound discretion, brushes asidethe procedural barrier and takes cognizance of the petitions, as we have done in the early Emergency Powers Cases,20 where we had occasion to rule:"x x x ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders issued by President Quirino although they were involving only an indirect andgeneral interest shared in common with the public. The Court dismissed the objection that they were not proper parties and ruled that transcendental importance to the public of thesecases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. We have since then applied the exception in many other cases.(Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343)." (Underscoring Supplied)This principle was reiterated in the subsequent cases of Gonzales vs. COMELEC,21 Daza vs. Singson,22 andBasco vs. Phil. Amusement and Gaming Corp.,23 where we emphatically held:"Considering however the importance to the public of the case at bar, and in keeping with the Courts duty, under the 1987 Constitution, to determine whether or not the other branches of thegovernment have kept themselves within the limits of the Constitution and the laws and that they have not abused the discretion given to them, the Court has brushed aside technicalities ofprocedure and has taken cognizance of this petition. x x x"Again, in the more recent case of Kilosbayan vs. Guingona, Jr.,24 thisCourt ruled that in cases of transcendental importance, the Court may relax the standing requirements and allow asuit to prosper even where there is no direct injury to the party claiming the right of judicial review.Although courts generally avoid having to decide a constitutional question based on the doctrine of separation of powers, which enjoins upon the departments of the government a becomingrespect for each others acts,25 this Court nevertheless resolves to take cognizance of the instant petitions.APPLICABLE CONSTITUTIONAL PROVISIONOne focal point of inquiry in this controversy is the determination of which provision of the Constitution applies, with regard to the exercise by the senate of its constitutional power to concurwith the VFA. Petitioners argue that Section 25, Article XVIII is applicable considering that the VFA has for its subject the presence of foreign military troops in the Philippines. Respondents, onthe contrary, maintain that Section 21, Article VII should apply inasmuch as the VFA is not a basing arrangement but an agreement which involves merely the temporary visits of United Statespersonnel engaged in joint military exercises.The 1987 Phil. Constitution contains two provisions requiring the concurrence of the Senate on treaties or international agreements. Section 21, Article VII, which herein respondents invoke,reads:"No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate."Section 25, Article XVIII, provides:

"After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning Military Bases, foreign military bases, troops, or facilitiesshall not be allowed in the Philippines except under a treaty duly concurred in by the senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in anational referendum held for that purpose, and recognized as a treaty by the other contracting State."Section 21, Article VII deals with treatise or international agreements in general, in which case, the concurrence of at least two-thirds (2/3) of all the Members of the Senate is required to makethe subject treaty, or international agreement, valid and binding on the part of the Philippines. This provision lays down the general rule on treatise or international agreements and applies toany form of treaty with a wide variety of subject matter, such as, but not limited to, extradition or tax treatise or those economic in nature. All treaties or international agreements entered into bythe Philippines, regardless of subject matter, coverage, or particular designation or appellation, requires the concurrence of the Senate to be valid and effective.In contrast, Section 25, Article XVIII is a special provision that applies to treaties which involve the presence of foreign military bases, troops or facilities in the Philippines. Under this provision,the concurrence of the Senate is only one of the requisites to render compliance with the constitutional requirements and to consider the agreement binding on the Philippines. Section 25,Article XVIII further requires that "foreign military bases, troops, or facilities" may be allowed in the Philippines only by virtue of a treaty duly concurred in by the Senate, ratified by a majority ofthe votes cast in a national referendum held for that purpose if so required by Congress, and recognized as such by the other contracting state.It is our considered view that both constitutional provisions, far from contradicting each other, actually share some common ground. These constitutional provisions both embody phrases in thenegative and thus, are deemed prohibitory in mandate and character. In particular, Section 21 opens with the clause "No treaty x x x," and Section 25 contains the phrase "shall not beallowed." Additionally, in both instances, the concurrence of the Senate is indispensable to render the treaty or international agreement valid and effective.To our mind, the fact that the President referred the VFA to the Senate under Section 21, Article VII, and that the Senate extended its concurrence under the same provision, is immaterial. Forin either case, whether under Section 21, Article VII or Section 25, Article XVIII, the fundamental law is crystalline that the concurrence of the Senate is mandatory to comply with the strictconstitutional requirements.On the whole, the VFA is an agreement which defines the treatment of United States troops and personnel visiting the Philippines. It provides for the guidelines to govern such visits of militarypersonnel, and further defines the rights of the United States and the Philippine government in the matter of criminal jurisdiction, movement of vessel and aircraft, importation and exportationof equipment, materials and supplies.Undoubtedly, Section 25, Article XVIII, which specifically deals with treaties involving foreign military bases, troops, or facilities, should apply in the instant case. To a certain extent and in alimited sense, however, the provisions of section 21, Article VII will find applicability with regard to the issue and for the sole purpose of determining the number of votes required to obtain thevalid concurrence of the Senate, as will be further discussed hereunder.It is a finely-imbedded principle in statutory construction that a special provision or law prevails over a general one. Lex specialis derogat generali. Thus, where there is in the same statute aparticular enactment and also a general one which, in its most comprehensive sense, would include what is embraced in the former, the particular enactment must be operative, and thegeneral enactment must be taken to affect only such cases within its general language which are not within the provision of the particular enactment. 26In Leveriza vs. Intermediate Appellate Court,27 we enunciated:"x x x that another basic principle of statutory construction mandates that general legislation must give way to a special legislation on the same subject, and generally be so interpreted as toembrace only cases in which the special provisions are not applicable (Sto. Domingo vs. de los Angeles, 96 SCRA 139), that a specific statute prevails over a general statute (De Jesus vs.People, 120 SCRA 760) and that where two statutes are of equal theoretical application to a particular case, the one designed therefor specially should prevail (Wil Wilhensen Inc. vs. Baluyot,83 SCRA 38)."Moreover, it is specious to argue that Section 25, Article XVIII is inapplicable to mere transient agreements for the reason that there is no permanent placing of structure for the establishmentof a military base. On this score, the Constitution makes no distinction between "transient and "permanent". Certainly, we find nothing in Section 25, Article XVIII that requires foreign troops orfacilities to be stationed or placed permanently in the Philippines.It is a rudiment in legal hermenuetics that when no distinction is made by law, the Court should not distinguish-Ubi lex non distinguit nec nos distinguire debemos.In like manner, we do not subscribe to the argument that Section 25, Article XVIII is not controlling since no foreign military bases, but merely foreign troops and facilities, are involved in theVFA. Notably, a perusal of said constitutional provision reveals that the proscription covers "foreign military bases, troops, or facilities." Stated differently, this prohibition is not limited to theentry of troops and facilities without any foreign bases being established. The clause does not refer to "foreign military bases, troops, or facilities" collectively but treats them as separate andindependent subjects. The use of comma and the disjunctive word "or" clearly signifies disassociation and independence of one thing from the others included in the enumeration, 28 such that,the provision contemplates three different situations - a military treaty the subject of which could be either (a) foreign bases, (b) foreign troops, or (c) foreign facilities - any of the three standingalone places it under the coverage of Section 25, Article XVIII.To this end, the intention of the framers of the Charter, as manifested during the deliberations of the 1986 Constitutional Commission, is consistent with this interpretation:"MR. MAAMBONG. I just want to address a question or two to Commissioner Bernas.This formulation speaks of three things: foreign military bases, troops or facilities. My first question is: If the country does enter into such kind of a treaty, must it cover the three-bases,troops or facilities-or could the treaty entered into cover only one or two?FR. BERNAS. Definitely, it can cover only one. Whether it covers only one or it covers three, the requirement will be the same.MR. MAAMBONG. In other words, the Philippine government can enter into a treaty covering not bases but merely troops?FR. BERNAS. Yes.

MR. MAAMBONG. I cannot find any reason why the government can enter into a treaty covering only troops.FR. BERNAS. Why not? Probably if we stretch our imagination a little bit more, we will find some. We just want to cover everything." 29 (Underscoring Supplied)Moreover, military bases established within the territory of another state is no longer viable because of the alternatives offered by new means and weapons of warfare such as nuclearweapons, guided missiles as well as huge sea vessels that can stay afloat in the sea even for months and years without returning to their home country. These military warships are actuallyused as substitutes for a land-home base not only of military aircraft but also of military personnel and facilities. Besides, vessels are mobile as compared to a land-based militaryheadquarters.At this juncture, we shall then resolve the issue of whether or not the requirements of Section 25 were complied with when the Senate gave its concurrence to the VFA.Section 25, Article XVIII disallows foreign military bases, troops, or facilities in the country, unless the following conditions are sufficiently met, viz: (a) it must be under a treaty; (b) the treatymust be duly concurred in by the Senate and, when so required by congress, ratified by a majority of the votes cast by the people in a national referendum; and (c) recognized as atreaty by the other contracting state.There is no dispute as to the presence of the first two requisites in the case of the VFA. The concurrence handed by the Senate through Resolution No. 18 is in accordance with the provisionsof the Constitution, whether under the general requirement in Section 21, Article VII, or the specific mandate mentioned in Section 25, Article XVIII, the provision in the latter article requiringratification by a majority of the votes cast in a national referendum being unnecessary since Congress has not required it.As to the matter of voting, Section 21, Article VII particularly requires that a treaty or international agreement, to be valid and effective, must be concurred in by at least two-thirds of all themembers of the Senate. On the other hand, Section 25, Article XVIII simply provides that the treaty be "duly concurred in by the Senate."Applying the foregoing constitutional provisions, a two-thirds vote of all the members of the Senate is clearly required so that the concurrence contemplated by law may be validly obtained anddeemed present. While it is true that Section 25, Article XVIII requires, among other things, that the treaty-the VFA, in the instant case-be "duly concurred in by the Senate," it is very truehowever that said provision must be related and viewed in light of the clear mandate embodied in Section 21, Article VII, which in more specific terms, requires that the concurrence of a treaty,or international agreement, be made by a two -thirds vote of all the members of the Senate. Indeed, Section 25, Article XVIII must not be treated in isolation to section 21, Article, VII.As noted, the "concurrence requirement" under Section 25, Article XVIII must be construed in relation to the provisions of Section 21, Article VII. In a more particular language, the concurrenceof the Senate contemplated under Section 25, Article XVIII means that at least two-thirds of all the members of the Senate favorably vote to concur with the treaty-the VFA in the instant case.Under these circumstances, the charter provides that the Senate shall be composed of twenty-four (24) Senators. 30 Without a tinge of doubt, two-thirds (2/3) of this figure, or not less thansixteen (16) members, favorably acting on the proposal is an unquestionable compliance with the requisite number of votes mentioned in Section 21 of Article VII. The fact that there wereactually twenty-three (23) incumbent Senators at the time the voting was made, 31 will not alter in any significant way the circumstance that more than two-thirds of the members of the Senateconcurred with the proposed VFA, even if the two-thirds vote requirement is based on this figure of actual members (23). In this regard, the fundamental law is clear that two-thirds of the 24Senators, or at least 16 favorable votes, suffice so as to render compliance with the strict constitutional mandate of giving concurrence to the subject treaty.Having resolved that the first two requisites prescribed in Section 25, Article XVIII are present, we shall now pass upon and delve on the requirement that the VFA should be recognized as atreaty by the United States of America.Petitioners content that the phrase "recognized as a treaty," embodied in section 25, Article XVIII, means that the VFA should have the advice and consent of the United States Senatepursuant to its own constitutional process, and that it should not be considered merely an executive agreement by the United States.In opposition, respondents argue that the letter of United States Ambassador Hubbard stating that the VFA is binding on the United States Government is conclusive, on the point that the VFAis recognized as a treaty by the United States of America. According to respondents, the VFA, to be binding, must only be accepted as a treaty by the United States.This Court is of the firm view that the phrase "recognized as a treaty" means that the other contracting partyaccepts or acknowledges the agreement as a treaty.32 To require the othercontracting state, the United States of America in this case, to submit the VFA to the United States Senate for concurrence pursuant to its Constitution, 33 is to accord strict meaning to thephrase.Well-entrenched is the principle that the words used in the Constitution are to be given their ordinary meaning except where technical terms are employed, in which case the significance thusattached to them prevails. Its language should be understood in the sense they have in common use. 34Moreover, it is inconsequential whether the United States treats the VFA only as an executive agreement because, under international law, an executive agreement is as binding as atreaty.35 To be sure, as long as the VFA possesses the elements of an agreement under international law, the said agreement is to be taken equally as a treaty.A treaty, as defined by the Vienna Convention on the Law of Treaties, is "an international instrument concluded between States in written form and governed by international law, whetherembodied in a single instrument or in two or more related instruments, and whatever its particular designation." 36 There are many other terms used for a treaty or international agreement,some of which are: act, protocol, agreement, compromis d arbitrage, concordat, convention, declaration, exchange of notes, pact, statute, charter and modus vivendi. All writers, from HugoGrotius onward, have pointed out that the names or titles of international agreements included under the general term treaty have little or no legal significance. Certain terms are useful, butthey furnish little more than mere description.37Article 2(2) of the Vienna Convention provides that "the provisions of paragraph 1 regarding the use of terms in the present Convention are without prejudice to the use of those terms, or to themeanings which may be given to them in the internal law of the State."Thus, in international law, there is no difference between treaties and executive agreements in their binding effect upon states concerned, as long as the negotiating functionaries haveremained within their powers.38International law continues to make no distinction between treaties and executive agreements: they are equally binding obligations upon nations. 39

In our jurisdiction, we have recognized the binding effect of executive agreements even without the concurrence of the Senate or Congress. In Commissioner of Customs vs. Eastern SeaTrading,40 we had occasion to pronounce:"x x x the right of the Executive to enter into binding agreements without the necessity of subsequent congressional approval has been confirmed by long usage. From the earliest days of ourhistory we have entered into executive agreements covering such subjects as commercial and consular relations, most-favored-nation rights, patent rights, trademark and copyright protection,postal and navigation arrangements and the settlement of claims. The validity of these has never been seriously questioned by our courts."x x x x x x x x x"Furthermore, the United States Supreme Court has expressly recognized the validity and constitutionality of executive agreements entered into without Senate approval. (39 Columbia LawReview, pp. 753-754) (See, also, U.S. vs. Curtis Wright Export Corporation, 299 U.S. 304, 81 L. ed. 255; U.S. vs. Belmont, 301 U.S. 324, 81 L. ed. 1134; U.S. vs. Pink, 315 U.S. 203, 86L. ed. 796; Ozanic vs. U.S. 188 F. 2d. 288; Yale Law Journal, Vol. 15 pp. 1905-1906; California Law Review, Vol. 25, pp. 670-675; Hyde on International Law [revised Edition], Vol. 2,pp. 1405, 1416-1418; willoughby on the U.S. Constitution Law, Vol. I [2d ed.], pp. 537-540; Moore, International Law Digest, Vol. V, pp. 210-218; Hackworth, International LawDigest, Vol. V, pp. 390-407). (Italics Supplied)" (Emphasis Ours)The deliberations of the Constitutional Commission which drafted the 1987 Constitution is enlightening and highly-instructive:"MR. MAAMBONG. Of course it goes without saying that as far as ratification of the other state is concerned, that is entirely their concern under their own laws.FR. BERNAS. Yes, but we will accept whatever they say. If they say that we have done everything to make it a treaty, then as far as we are concerned, we will accept it as a treaty." 41The records reveal that the United States Government, through Ambassador Thomas C. Hubbard, has stated that the United States government has fully committed to living up to the terms ofthe VFA.42 For as long as the united States of America accepts or acknowledges the VFA as a treaty, and binds itself further to comply with its obligations under the treaty, there is indeedmarked compliance with the mandate of the Constitution.Worth stressing too, is that the ratification, by the President, of the VFA and the concurrence of the Senate should be taken as a clear an unequivocal expression of our nations consent to bebound by said treaty, with the concomitant duty to uphold the obligations and responsibilities embodied thereunder.Ratification is generally held to be an executive act, undertaken by the head of the state or of the government, as the case may be, through which the formal acceptance of the treaty isproclaimed.43 A State may provide in its domestic legislation the process of ratification of a treaty. The consent of the State to be bound by a treaty is expressed by ratification when: (a) thetreaty provides for such ratification, (b) it is otherwise established that the negotiating States agreed that ratification should be required, (c) the representative of the State has signed the treatysubject to ratification, or (d) the intention of the State to sign the treaty subject to ratification appears from the full powers of its representative, or was expressed during the negotiation. 44In our jurisdiction, the power to ratify is vested in the President and not, as commonly believed, in the legislature. The role of the Senate is limited only to giving or withholding its consent, orconcurrence, to the ratification.45With the ratification of the VFA, which is equivalent to final acceptance, and with the exchange of notes between the Philippines and the United States of America, it now becomes obligatoryand incumbent on our part, under the principles of international law, to be bound by the terms of the agreement. Thus, no less than Section 2, Article II of the Constitution, 46 declares that thePhilippines adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation and amity withall nations.As a member of the family of nations, the Philippines agrees to be bound by generally accepted rules for the conduct of its international relations. While the international obligation devolvesupon the state and not upon any particular branch, institution, or individual member of its government, the Philippines is nonetheless responsible for violations committed by any branch orsubdivision of its government or any official thereof. As an integral part of the community of nations, we are responsible to assure that our government, Constitution and laws will carry out ourinternational obligation.47 Hence, we cannot readily plead the Constitution as a convenient excuse for non-compliance with our obligations, duties and responsibilities under international law.Beyond this, Article 13 of the Declaration of Rights and Duties of States adopted by the International Law Commission in 1949 provides: "Every State has the duty to carry out in good faith itsobligations arising from treaties and other sources of international law, and it may not invoke provisions in its constitution or its laws as an excuse for failure to perform this duty." 48Equally important is Article 26 of the convention which provides that "Every treaty in force is binding upon the parties to it and must be performed by them in good faith." This is known as theprinciple of pacta sunt servandawhich preserves the sanctity of treaties and have been one of the most fundamental principles of positive international law, supported by the jurisprudence ofinternational tribunals.49NO GRAVE ABUSE OF DISCRETIONIn the instant controversy, the President, in effect, is heavily faulted for exercising a power and performing a task conferred upon him by the Constitution-the power to enter into and ratifytreaties. Through the expediency of Rule 65 of the Rules of Court, petitioners in these consolidated cases impute grave abuse of discretion on the part of the chief Executive in ratifying theVFA, and referring the same to the Senate pursuant to the provisions of Section 21, Article VII of the Constitution.On this particular matter, grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, when the power is exercised in anarbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty enjoined or to act at all in contemplationof law.50By constitutional fiat and by the intrinsic nature of his office, the President, as head of State, is the sole organ and authority in the external affairs of the country. In many ways, the President isthe chief architect of the nations foreign policy; his "dominance in the field of foreign relations is (then) conceded." 51 Wielding vast powers an influence, his conduct in the external affairs of thenation, as Jefferson describes, is "executive altogether."52

As regards the power to enter into treaties or international agreements, the Constitution vests the same in the President, subject only to the concurrence of at least two-thirds vote of all themembers of the Senate. In this light, the negotiation of the VFA and the subsequent ratification of the agreement are exclusive acts which pertain solely to the President, in the lawful exerciseof his vast executive and diplomatic powers granted him no less than by the fundamental law itself. Into the field of negotiation the Senate cannot intrude, and Congress itself is powerless toinvade it.53 Consequently, the acts or judgment calls of the President involving the VFA-specifically the acts of ratification and entering into a treaty and those necessary or incidental to theexercise of such principal acts - squarely fall within the sphere of his constitutional powers and thus, may not be validly struck down, much less calibrated by this Court, in the absence of clearshowing of grave abuse of power or discretion.It is the Courts considered view that the President, in ratifying the VFA and in submitting the same to the Senate for concurrence, acted within the confines and limits of the powers vested inhim by the Constitution. It is of no moment that the President, in the exercise of his wide latitude of discretion and in the honest belief that the VFA falls within the ambit of Section 21, Article VIIof the Constitution, referred the VFA to the Senate for concurrence under the aforementioned provision. Certainly, no abuse of discretion, much less a grave, patent and whimsical abuse ofjudgment, may be imputed to the President in his act of ratifying the VFA and referring the same to the Senate for the purpose of complying with the concurrence requirement embodied in thefundamental law. In doing so, the President merely performed a constitutional task and exercised a prerogative that chiefly pertains to the functions of his office. Even if he erred in submittingthe VFA to the Senate for concurrence under the provisions of Section 21 of Article VII, instead of Section 25 of Article XVIII of the Constitution, still, the President may not be faulted orscarred, much less be adjudged guilty of committing an abuse of discretion in some patent, gross, and capricious manner.For while it is conceded that Article VIII, Section 1, of the Constitution has broadened the scope of judicial inquiry into areas normally left to the political departments to decide, such as thoserelating to national security, it has not altogether done away with political questions such as those which arise in the field of foreign relations. 54 The High Tribunals function, as sanctioned byArticle VIII, Section 1, "is merely (to) check whether or not the governmental branch or agency has gone beyond the constitutional limits of its jurisdiction, not that it erred or has a differentview. In the absence of a showing (of) grave abuse of discretion amounting to lack of jurisdiction, there is no occasion for the Court to exercise its corrective powerIt has no power to lookinto what it thinks is apparent error."55As to the power to concur with treaties, the constitution lodges the same with the Senate alone.1wphi1 Thus, once the Senate56 performs that power, or exercises its prerogative within theboundaries prescribed by the Constitution, the concurrence cannot, in like manner, be viewed to constitute an abuse of power, much less grave abuse thereof. Corollarily, the Senate, in theexercise of its discretion and acting within the limits of such power, may not be similarly faulted for having simply performed a task conferred and sanctioned by no less than the fundamentallaw.For the role of the Senate in relation to treaties is essentially legislative in character; 57 the Senate, as an independent body possessed of its own erudite mind, has the prerogative to eitheraccept or reject the proposed agreement, and whatever action it takes in the exercise of its wide latitude of discretion, pertains to the wisdom rather than the legality of the act. In this sense,the Senate partakes a principal, yet delicate, role in keeping the principles of separation of powers and of checks and balances alive and vigilantly ensures that these cherished rudimentsremain true to their form in a democratic government such as ours. The Constitution thus animates, through this treaty-concurring power of the Senate, a healthy system of checks andbalances indispensable toward our nations pursuit of political maturity and growth. True enough, rudimentary is the principle that matters pertaining to the wisdom of a legislative act arebeyond the ambit and province of the courts to inquire.In fine, absent any clear showing of grave abuse of discretion on the part of respondents, this Court- as the final arbiter of legal controversies and staunch sentinel of the rights of the people is then without power to conduct an incursion and meddle with such affairs purely executive and legislative in character and nature. For the Constitution no less, maps out the distinctboundaries and limits the metes and bounds within which each of the three political branches of government may exercise the powers exclusively and essentially conferred to it by law.WHEREFORE, in light of the foregoing disquisitions, the instant petitions are hereby DISMISSED. SO ORDERED.Davide, Jr., C.J., Bellosillo, Kapunan, Quisumbing, Purisima, Pardo, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.Melo, and Vitug, JJ., join the dissent of J. Puno.Puno , J., see dissenting opinion.Mendoza, J., in the result.Panganiban, J., no part due to close personal and former professional relations with a petitioner, Sen. J.R. Salonga.

G.R. No. 151445

April 11, 2002

ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners, vs. HONORABLE EXECUTIVE SECRETARY as alter ego of HER EXCELLENCEY GLORIA MACAPAGAL-ARROYO, andHONORABLE ANGELO REYES in his capacity as Secretary of National Defense,respondents.---------------------------------------SANLAKAS and PARTIDO NG MANGGAGAWA, petitioners-intervenors, vs. GLORIA MACAPAGA-ARROYO, ALBERTO ROMULO, ANGELO REYES, respondents.DE LEON, JR., J.:This case involves a petition for certiorari and prohibition as well as a petition-in-intervention, praying that respondents be restrained from proceeding with the so-called "Balikatan 02-1" andthat after due notice and hearing, that judgment be rendered issuing a permanent writ of injunction and/or prohibition against the deployment of U.S. troops in Basilan and Mindanao for beingillegal and in violation of the Constitution.The facts are as follows:Beginning January of this year 2002, personnel from the armed forces of the United States of America started arriving in Mindanao to take part, in conjunction with the Philippine military, in"Balikatan 02-1." These so-called "Balikatan" exercises are the largest combined training operations involving Filipino and American troops. In theory, they are a simulation of joint militarymaneuvers pursuant to the Mutual Defense Treaty,1 a bilateral defense agreement entered into by the Philippines and the United States in 1951.Prior to the year 2002, the last "Balikatan" was held in 1995. This was due to the paucity of any formal agreement relative to the treatment of United States personnel visiting the Philippines. Inthe meantime, the respective governments of the two countries agreed to hold joint exercises on a reduced scale. The lack of consensus was eventually cured when the two nations concludedthe Visiting Forces Agreement (V FA) in 1999.The entry of American troops into Philippine soil is proximately rooted in the international anti-terrorism campaign declared by President George W. Bush in reaction to the tragic events thatoccurred on September 11, 2001. On that day, three (3) commercial aircrafts were hijacked, flown and smashed into the twin towers of the World Trade Center in New York City and thePentagon building in Washington, D.C. by terrorists with alleged links to the al-Qaeda ("the Base"), a Muslim extremist organization headed by the infamous Osama bin Laden. Of nocomparable historical parallels, these acts caused billions of dollars worth of destruction of property and incalculable loss of hundreds of lives.On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed this petition for certiorari and prohibition, attacking the constitutionality of the joint exercise. 2 They were joinedsubsequently by SANLAKAS and PARTIDO NG MANGGAGAWA, both party-Iist organizations, who filed a petition-in-intervention on February 11, 2002.Lim and Ersando filed suit in their capacities as citizens, lawyers and taxpayers. SANLAKAS and PARTIDO, on the other hand, aver that certain members of their organization are residents ofZamboanga and Sulu, and hence will be directly affected by the operations being conducted in Mindanao. They likewise pray for a relaxation on the rules relative to locus standi citing theunprecedented importance of the issue involved.On February 71 2002 the Senate conducted a hearing on the "Balikatan" exercise wherein Vice-President Teofisto T. Guingona, Jr., who is concurrently Secretary of Foreign. Affairs, presentedthe Draft Terms of Reference (TOR).3 Five days later, he approved the TOR, which we quote hereunder:I. POLICY LEVEL1. The Exercise shall be consistent with the Philippine Constitution and all its activities shall be in consonance with the laws of the land and the provisions of the RP-US VisitingForces Agreement (VFA).2. The conduct of this training Exercise is in accordance with pertinent United Nations resolutions against global terrorism as understood by the respective parties.3. No permanent US basing and support facilities shall be established. Temporary structures such as those for troop billeting, classroom instruction and messing may be set up foruse by RP and US Forces during the Exercise.4. The Exercise shall be implemented jointly by RP and US Exercise Co-Directors under the authority of the Chief of Staff, AFP. In no instance will US Forces operateindependently during field training exercises (FTX). AFP and US Unit Commanders will retain command over their respective forces under the overall authority of the Exercise CoDirectors. RP and US participants shall comply with operational instructions of the AFP during the FTX.5. The exercise shall be conducted and completed within a period of not more than six months, with the projected participation of 660 US personnel and 3,800 RP Forces. TheChief of Staff, AFP shall direct the Exercise Co-Directors to wind up and terminate the Exercise and other activities within the six month Exercise period.6. The Exercise is a mutual counter-terrorism advising, assisting and training Exercise relative to Philippine efforts against the ASG, and will be conducted on the Island of Basilan.Further advising, assisting and training exercises shall be conducted in Malagutay and the Zamboanga area. Related activities in Cebu will be for support of the Exercise.7. Only 160 US Forces organized in 12-man Special Forces Teams shall be deployed with AFP field, commanders. The US teams shall remain at the Battalion Headquarters and,when approved, Company Tactical headquarters where they can observe and assess the performance of the AFP Forces.8. US exercise participants shall not engage in combat, without prejudice to their right of self-defense.9. These terms of Reference are for purposes of this Exercise only and do not create additional legal obligations between the US Government and the Republic of the Philippines.II. EXERCISE LEVEL1. TRAININGa. The Exercise shall involve the conduct of mutual military assisting, advising and training of RP and US Forces with the primary objective of enhancing theoperational capabilities of both forces to combat terrorism.b. At no time shall US Forces operate independently within RP territory.c. Flight plans of all aircraft involved in the exercise will comply with the local air traffic regulations.2. ADMINISTRATION & LOGISTICSa. RP and US participants shall be given a country and area briefing at the start of the Exercise. This briefing shall acquaint US Forces on the culture and sensitivitiesof the Filipinos and the provisions of the VF A. The briefing shall also promote the full cooperation on the part of the RP and US participants for the successful conductof the Exercise.b. RP and US participating forces may share, in accordance with their respective laws and regulations, in the use of their resources, equipment and other assets. Theywill use their respective logistics channels.c. Medical evaluation shall be jointly planned and executed utilizing RP and US assets and resources.d. Legal liaison officers from each respective party shall be appointed by the Exercise Directors.3. PUBLIC AFFAIRSa. Combined RP-US Information Bureaus shall be established at the Exercise Directorate in Zamboanga City and at GHQ, AFP in Camp Aguinaldo, Quezon City.b. Local media relations will be the concern of the AFP and all public affairs guidelines shall be jointly developed by RP and US Forces.c. Socio-Economic Assistance Projects shall be planned and executed jointly by RP and US Forces in accordance with their respective laws and regulations, and inconsultation with community and local government officials.Contemporaneously, Assistant Secretary for American Affairs Minerva Jean A. Falcon and United States Charge d' Affaires Robert Fitts signed the Agreed Minutes of the discussion betweenthe Vice-President and Assistant Secretary Kelly.4Petitioners Lim and Ersando present the following arguments:

ITHE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL DEFENSE TREATY (MDT) in 1951 TO PROVIDE MUTUAL MILITARY ASSIST ANCE IN ACCORDANCEWITH THE 'CONSTITUTIONAL PROCESSE-S' OF EACH COUNTRY ONLY IN THE CASE OF AN ARMED ATTACK BY AN EXTERNAL AGGRESSOR, MEANING A THIRDCOUNTRY AGAINST ONE OF THEM.BY NO STRETCH OF THE IMAGINA TION CAN IT BE SAID THAT THE ABU SAYYAF BANDITS IN BASILAN CONSTITUTE AN EXTERNAL ARMED FORCE THAT HASSUBJECT THE PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO WARRANT U.S. MILITARY ASSISTANCE UNDER THE MDT OF 1951.IINEITHER DOES THE VFA OF 1999 AUTHORIZE AMERICAN SOLDIERS TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE TERRITORY, NOT EVEN TO FIRE BACK "IFFIRED UPON".Substantially the same points are advanced by petitioners SANLAKAS and PARTIDO.In his Comment, the Solicitor General points to infirmities in the petitions regarding, inter alia, Lim and Ersando's standing to file suit, the prematurity of the action, as well as the impropriety ofavailing of certiorari to ascertain a question of fact. Anent their locus standi, the Solicitor General argues that first, they may not file suit in their capacities as, taxpayers inasmuch as it has notbeen shown that "Balikatan 02-1 " involves the exercise of Congress' taxing or spending powers. Second, their being lawyers does not invest them with sufficient personality to initiate thecase, citing our ruling in Integrated Bar of the Philippines v. Zamora.5 Third, Lim and Ersando have failed to demonstrate the requisite showing of direct personal injury. We agree.It is also contended that the petitioners are indulging in speculation. The Solicitor General is of the view that since the Terms of Reference are clear as to the extent and duration of "Balikatan02-1," the issues raised by petitioners are premature, as they are based only on a fear of future violation of the Terms of Reference. Even petitioners' resort to a special civil action for certiorariis assailed on the ground that the writ may only issue on the basis of established facts.Apart from these threshold issues, the Solicitor General claims that there is actually no question of constitutionality involved. The true object of the instant suit, it is said, is to obtain aninterpretation of the V FA. The Solicitor General asks that we accord due deference to the executive determination that "Balikatan 02-1" is covered by the VFA, considering the President'smonopoly in the field of foreign relations and her role as commander-in-chief of the Philippine armed forces.Given the primordial importance of the issue involved, it will suffice to reiterate our view on this point in a related case:Notwithstanding, in view of the paramount importance and the constitutional significance of the issues raised in the petitions, this Court, in the exercise of its sounddiscretion, brushes aside the procedural barrier and takes cognizance of the petitions, as we have done in the early Emergency Powers Cases, where we had occasion torule:'x x x ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders issued by President Quirino although they were involvingonly an indirect and general interest shared in common with the public. The Court dismissed the objection that they were not proper parties and ruled that 'transcendentalimportance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. ' We havesince then applied the exception in many other cases. [citation omitted]This principle was reiterated in the subsequent cases of Gonzales vs. COMELEC, Daza vs. Singson, and Basco vs. Phil, Amusement and Gaming Corporation, where weemphatically held:Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under the 1987 Constitution, to determine whether or not theother branches of the government have kept themselves within the limits of the Constitution and the laws that they have not abused the discretion given to them, theCourt has brushed aside technicalities of procedure and has taken cognizance of this petition. xxx'Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this Court ruled that in cases of transcendental importance, the Court may relax the standing requirementsand allow a suit to prosper even where there is no direct injury to the party claiming the right of judicial review.Although courts generally avoid having to decide a constitutional question based on the doctrine of separation of powers, which enjoins upon the department of the government abecoming respect for each other's act, this Court nevertheless resolves to take cognizance of the instant petition. 6Hence, we treat with similar dispatch the general objection to the supposed prematurity of the action. At any rate, petitioners' concerns on the lack of any specific regulation on the latitude ofactivity US personnel may undertake and the duration of their stay has been addressed in the Terms of Reference.The holding of "Balikatan 02-1" must be studied in the framework of the treaty antecedents to which the Philippines bound itself. The first of these is the Mutual Defense Treaty (MDT, forbrevity). The MDT has been described as the "core" of the defense relationship between the Philippines and its traditional ally, the United States. Its aim is to enhance the strategic andtechnological capabilities of our armed forces through joint training with its American counterparts; the "Balikatan" is the largest such training exercise directly supporting the MDT's objectives.It is this treaty to which the V FA adverts and the obligations thereunder which it seeks to reaffirm.The lapse of the US-Philippine Bases Agreement in 1992 and the decision not to renew it created a vacuum in US-Philippine defense relations, that is, until it was replaced by the VisitingForces Agreement. It should be recalled that on October 10, 2000, by a vote of eleven to three, this Court upheld the validity of the VFA. 7 The V FA provides the "regulatory mechanism" bywhich "United States military and civilian personnel [may visit] temporarily in the Philippines in connection with activities approved by the Philippine Government." It contains provisions relativeto entry and departure of American personnel, driving and vehicle registration, criminal jurisdiction, claims, importation and exportation, movement of vessels and aircraft, as well as theduration of the agreement and its termination. It is the VFA which gives continued relevance to the MDT despite the passage of years. Its primary goal is to facilitate the promotion of optimalcooperation between American and Philippine military forces in the event of an attack by a common foe.The first question that should be addressed is whether "Balikatan 02-1" is covered by the Visiting Forces Agreement. To resolve this, it is necessary to refer to the V FA itself: Not much helpcan be had therefrom, unfortunately, since the terminology employed is itself the source of the problem. The VFA permits United States personnel to engage, on an impermanent basis, in"activities," the exact meaning of which was left undefined. The expression is ambiguous, permitting a wide scope of undertakings subject only to the approval of the Philippinegovernment.8 The sole encumbrance placed on its definition is couched in the negative, in that United States personnel must "abstain from any activity inconsistent with the spirit of thisagreement, and in particular, from any political activity."9 All other activities, in other words, are fair game.We are not left completely unaided, however. The Vienna Convention on the Law of Treaties, which contains provisos governing interpretations of international agreements, state:SECTION 3. INTERPRETATION OF TREATIESArticle 31General rule of interpretation1. A treaty shall be interpreted in good faith ill accordance with the ordinary meaning to be given to the tenus of the treaty in their context and in the light of its object and purpose.2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:(a) any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;(b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to theparty.3. There shall be taken into account, together with the context:(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.4. A special meaning shall be given to a term if it is established that the parties so intended.Article 32Supplementary means of interpretationRecourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm themeaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31 :(a) leaves the meaning ambiguous or obscure; or(b) leads to a result which is manifestly absurd unreasonable.It is clear from the foregoing that the cardinal rule of interpretation must involve an examination of the text, which is presumed to verbalize the parties' intentions. The Convention likewisedictates what may be used as aids to deduce the meaning of terms, which it refers to as the context of the treaty, as well as other elements may be taken into account alongside the aforesaidcontext. As explained by a writer on the Convention ,[t]he Commission's proposals (which were adopted virtually without change by the conference and are now reflected in Arts. 31 & 32 of the Convention) were clearly based on the viewthat the text of a treaty must be presumed to be the authentic expression of the intentions of the parties; the Commission accordingly came down firmly in favour of the view that 'thestarting point of interpretation is the elucidation of the meaning of the text, not an investigation ab initio into the intentions of the parties'. This is not to say thatthe travauxpreparatoires of a treaty , or the circumstances of its conclusion, are relegated to a subordinate, and wholly ineffective, role. As Professor Briggs points out, no rigid temporalprohibition on resort to travaux preparatoires of a treaty was intended by the use of the phrase 'supplementary means of interpretation' in what is now Article 32 of the ViennaConvention. The distinction between the general rule of interpretation and the supplementary means of interpretation is intended rather to ensure that the supplementary means do notconstitute an alternative, autonomous method of interpretation divorced from the general rule. 10The Terms of Reference rightly fall within the context of the VFA.After studied reflection, it appeared farfetched that the ambiguity surrounding the meaning of the word .'activities" arose from accident. In our view, it was deliberately made that way to giveboth parties a certain leeway in negotiation. In this manner, visiting US forces may sojourn in Philippine territory for purposes other than military. As conceived, the joint exercises may includetraining on new techniques of patrol and surveillance to protect the nation's marine resources, sea search-and-rescue operations to assist vessels in distress, disaster relief operations, civicaction projects such as the building of school houses, medical and humanitarian missions, and the like.Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume that .'Balikatan 02-1," a "mutual anti- terrorism advising, assisting and trainingexercise," falls under the umbrella of sanctioned or allowable activities in the context of the agreement. Both the history and intent of the Mutual Defense Treaty and the V FA support theconclusion that combat-related activities -as opposed to combat itself -such as the one subject of the instant petition, are indeed authorized.That is not the end of the matter, though. Granted that "Balikatan 02-1" is permitted under the terms of the VFA, what may US forces legitimately do in furtherance of their aim to provideadvice, assistance and training in the global effort against terrorism? Differently phrased, may American troops actually engage in combat in Phi. territory? The Terms of Reference are explicitenough. Paragraph 8 of section I stipulates that US exercise participants may not engage in combat "except in self-defense." We wryly note that this sentiment is admirable in the abstractbut difficult in implementation. The target of "Balikatan 02-1 I" the Abu Sayyaf, cannot reasonably be expected to sit idly while the battle is brought to their very doorstep. They cannot beexpected to pick and choose their targets for they will not have the luxury of doing so. We state this point if only to signify our awareness that the parties straddle a fine line, observing thehonored legal maxim "Nemo potest facere per alium quod non potest facere per directum." 11 The indirect violation is actually petitioners' worry, that in reality, "Balikatan 02-1 " is actually a warprincipally conducted by the United States government, and that the provision on self-defense serves only as camouflage to conceal the true nature of the exercise. A clear pronouncement onthis matter thereby becomes crucial.In our considered opinion, neither the MDT nor the V FA allow foreign troops to engage in an offensive war on Philippine territory. We bear in mind the salutary proscription stated in theCharter of the United Nations, to wit:Article 2The Organization and its Members, in pursuit of the Purposes stated in Article 1, shall act in accordance with the following Principles.xxx xxx xxx xxx4. All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other mannerinconsistent with the Purposes of the United Nations.xxx xxx xxx xxxIn the same manner, both the Mutual Defense Treaty and the Visiting Forces Agreement, as in all other treaties and international agreements to which the Philippines is a party, must be readin the context of the 1987 Constitution. In particular, the Mutual Defense Treaty was concluded way before the present Charter, though it nevertheless remains in effect as a valid source ofinternational obligation. The present Constitution contains key provisions useful in determining the extent to which foreign military troops are allowed in Philippine territory. Thus, in theDeclaration of Principles and State Policies, it is provided that:xxx xxx xxx xxxSEC. 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheresto the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.xxx xxx xxx xxxSEC. 7. The State shall pursue an independent foreign policy. In its relations with other states the paramount consideration shall be national sovereignty, territorial integrity,national interest, and the right to self- determination.SEC. 8. The Philippines, consistent with the national interest, adopts and pursues a policy of freedom from nuclear weapons in the country.xxx xxx xxx xxxThe Constitution also regulates the foreign relations powers of the Chief Executive when it provides that "[n]o treaty or international agreement shall be valid and effective unless concurred inby at least two-thirds of all the members of the Senate."12 Even more pointedly, the Transitory Provisions state:Sec. 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning Military Bases, foreign military bases,troops or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of thevotes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting state.The aforequoted provisions betray a marked antipathy towards foreign military presence in the country, or of foreign influence in general. Hence, foreign troops are allowed entry into thePhilippines only by way of direct exception. Conflict arises then between the fundamental law and our obligations arising from international agreements.A rather recent formulation of the relation of international law vis-a-vis municipal law was expressed in Philip Morris, Inc. v. Court of Appeals,13 to wit:xxx Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the municipalsphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not superior, to national legislation.This is not exactly helpful in solving the problem at hand since in trying to find a middle ground, it favors neither one law nor the other, which only leaves the hapless seeker with an unsolveddilemma. Other more traditional approaches may offer valuable insights.From the perspective of public international law, a treaty is favored over municipal law pursuant to the principle ofpacta sunt servanda. Hence, "[e]very treaty in force is binding upon the partiesto it and must be performed by them in good faith."14 Further, a party to a treaty is not allowed to "invoke the provisions of its internal law as justification for its failure to perform a treaty." 15Our Constitution espouses the opposing view. Witness our jurisdiction as I stated in section 5 of Article VIII:The Supreme Court shall have the following powers:xxx xxx xxx xxx(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and order of lower courts in:

(A) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, orregulation is in question.xxx xxx xxx xxxIn Ichong v. Hernandez,16 we ruled that the provisions of a treaty are always subject to qualification or amendment by a subsequent law, or that it is subject to the police power of the State.In Gonzales v. Hechanova,17xxx As regards the question whether an international agreement may be invalidated by our courts, suffice it to say that the Constitution of the Philippines has clearly settled it in theaffirmative, by providing, in Section 2 of Article VIII thereof, that the Supreme Court may not be deprived "of its jurisdiction to review, revise, reverse, modify, or affirm on appeal,certiorari, or writ of error as the law or the rules of court may provide, final judgments and decrees of inferior courts in -( I) All cases in which the constitutionality or validity ofanytreaty, law, ordinance, or executive order or regulation is in question." In other words, our Constitution authorizes the nullification of a treaty, not only when it conflicts with thefundamental law, but, also, when it runs counter to an act of Congress.The foregoing premises leave us no doubt that US forces are prohibited / from engaging in an offensive war on Philippine territory.Yet a nagging question remains: are American troops actively engaged in combat alongside Filipino soldiers under the guise of an alleged training and assistance exercise? Contrary to whatpetitioners would have us do, we cannot take judicial notice of the events transpiring down south,18 as reported from the saturation coverage of the media. As a rule, we do not takecognizance of newspaper or electronic reports per se, not because of any issue as to their truth, accuracy, or impartiality, but for the simple reason that facts must be established in accordancewith the rules of evidence. As a result, we cannot accept, in the absence of concrete proof, petitioners' allegation that the Arroyo government is engaged in "doublespeak" in trying to pass offas a mere training exercise an offensive effort by foreign troops on native soil. The petitions invite us to speculate on what is really happening in Mindanao, to issue I make factual findings onmatters well beyond our immediate perception, and this we are understandably loath to do.It is all too apparent that the determination thereof involves basically a question of fact. On this point, we must concur with the Sol. Gen. that the present subject matter is not a fit topic for aspecial civil action for certiorari. We have held in too many instances that questions of fact are not entertained in such a remedy. The sole object of the writ is to correct errors of jurisdiction orgrave abuse of discretion: The phrase "grave abuse of discretion" has a precise meaning in law, denoting abuse of discretion "too patent and gross as to amount to an evasion of a positiveduty, or a virtual refusal to perform the duty enjoined or act in contemplation of law, or where the power is exercised in an arbitrary and despotic manner by reason of passion and personalhostility."19In this connection, it will not be amiss to add that the Supreme Court is not a trier of facts.20Under the expanded concept of judicial power under the Constitution, courts are charged with the duty "to determine whether or not there has been a grave abuse of discretion amounting tolack or excess of jurisdiction on the part of any branch or instrumentality of the government." 21 From the facts obtaining, we find that the holding of "Balikatan 02-1" joint military exercise hasnot intruded into that penumbra of error that would otherwise call for correction on our part. In other words, respondents in the case at bar have not committed grave abuse of discretionamounting to lack or excess of jurisdiction.WHEREFORE, the petition and the petition-in-intervention are hereby DISMISSED without prejudice to the filing of a new petition sufficient in form and substance in the proper RTC.SO ORDERED.Bellosillo, Melo, Mendoza, Quisumbing, Carpio, JJ., concur.Kapunan, dissenting opinion.Ynares-Santiago, join the dissenting opinion.Panganiban, separate opinion.Davide., Jr., C.J., Puno, Sandoval-Gutierrez, join the main and separate opinion of J. Panganiban.Footnotes1For ready reference, the text of the treaty is reproduced herein:"MUTUAL DEFENSE TREATY BETWEEN THE REPUBLIC OF THE PHILIPPINES ANDTHE UNITED STATES OF AMERICA

"In order more effectively to achieve the objective of this Treaty, the Parties separately andjointly by self-help and mutual aid will maintain and develop their individual and collectivecapacity to resist armed attack.

30 August 1951"The parties to this Treaty,'"Reaffirming their faith in the purposes and principles of the Charter of the United Nationsand their desire to live in peace with all peoples and all Governments, and desiring tostrengthen the fabric of peace in the Pacific Area,"Recalling with mutual pride the historic relationship which brought their two peoplestogether in a common bond of sympathy and mutual ideals to fight side-by-side againstimperialist aggression during the last war,"Desiring to declare publicly and formally their sense of unity and their commondetermination to defend themselves against external armed attack, so that no potentialaggressor could be under the illusion that either of them stands alone in the Pacific Area,"Desiring further to strengthen their present efforts for collective defense for the preservationof peace and security pending the development of a more comprehensive system of regionalsecurity in the Pacific Area,"Agreeing that nothing in this present instrument shall be considered or interpreted as in anyway , or sense altering or diminishing any existing agreements or understandings betweenthe United States of America and the Republic of the Philippines,"Have agreed as follows:"ARTICLE I."The Parties undertake, as set forth in the Charter of the United Nations, to settle anyinternational disputes in which they may be involved by peaceful means in such a mannerthat international peace and security and justice are not endangered and to refrain in theirinternational relations from the threat or use of force in any manner inconsistent with thepurpose of the United Nations."ARTICLE II.

"ARTICLE III."The Parties, through their Foreign Ministers or their deputies, will consult together from timeto time regarding the implementation of this Treaty and whenever in the opinion of either ofthem the territorial integrity, political independence or security of either of the Parties isthreatened by external.'I armed attack in the Pacific."ARTICLE IV."Each Party recognizes that an armed attack in the Pacific Area on either of the Partieswould be dangerous to its own peace and safety and declares that it would act to meet thecommon dangers in accordance with its constitutional processes." Any such armed attack and all measures taken as a result thereof shall be immediatelyreported to the Security Council of the United Nations. Such measures shall be terminatedwhen the Security Council has taken the measures necessary to restore and maintaininternational peace and security."ARTICLE V."For the purpose of Article IV, an armed attack on either of the Parties is deemed to includean attack on the metropolitan territory of either of the Parties, or on the island territoriesunder its jurisdiction in the Pacific or on its armed forces, public vessels or aircraft used inthe Pacific."ARTICLE VI."This Treaty does not affect and shall not be interpreted as affecting in any way the rightsand obligations of the Parties under the Charter of the United Nations or the responsibility ofthe United Nations for the maintenance of international peace and security."ARTICLE VII."This Treaty shall be ratified by the United States of America and the Republic of thePhilippines in accordance with their respective constitutional processes and will come intoforce when instruments of ratification thereof have been exchanged by them at Manila."ARTICLE VIII.

"This Treaty shall remain in force indefinitely. Either Party may terminate it one year afternotice has been given to the other party.

"IN WITNESS WHEREOF the undersigned Plenipotentiaries have signed this Treaty."DONE in duplicate at Washington this thirtieth day of August, 1951."

G.R. No. 158088 July 6, 2005

SENATOR AQUILINO PIMENTEL, JR., REP. ETTA ROSALES, PHILIPPINE COALITION FOR THE ESTABLISHMENT OF THE INTERNATIONAL CRIMINAL COURT, TASK FORCEDETAINEES OF THE PHILIPPINES, FAMILIES OF VICTIMS OF INVOLUNTARY DISAPPEARANCES, BIANCA HACINTHA R. ROQUE, HARRISON JACOB R. ROQUE, AHMEDPAGLINAWAN, RON P. SALO,* LEAVIDES G. DOMINGO, EDGARDO CARLO VISTAN, NOEL VILLAROMAN, CELESTE CEMBRANO, LIZA ABIERA, JAIME ARROYO, MARWILLLASOS, CRISTINA ATENDIDO, ISRAFEL FAGELA, and ROMEL BAGARES, Petitioners,vs.OFFICE OF THE EXECUTIVE SECRETARY, HON. ALBERTO ROMULO, and the DEPARTMENT OF FOREIGN AFFAIRS, represented by HON. BLAS OPLE, Respondents.DECISIONPUNO J.:This is a petition for mandamus filed by petitioners to compel the Office of the Executive Secretary and the Department of Foreign Affairs to transmit the signed copy of the Rome Statute of theInternational Criminal Court to the Senate of the Philippines for its concurrence in accordance with Section 21, Article VII of the 1987 Constitution.The Rome Statute established the International Criminal Court which "shall have the power to exercise its jurisdiction over persons for the most serious crimes of international concern xxx andshall be complementary to the national criminal jurisdictions." 1 Its jurisdiction covers the crime of genocide, crimes against humanity, war crimes and the crime of aggression as defined in theStatute.2 The Statute was opened for signature by all states in Rome on July 17, 1998 and had remained open for signature until December 31, 2000 at the United Nations Headquarters inNew York. The Philippines signed the Statute on December 28, 2000 through Charge d AffairsEnrique A. Manalo of the Philippine Mission to the United Nations. 3 Its provisions, however,require that it be subject to ratification, acceptance or approval of the signatory states.4Petitioners filed the instant petition to compel the respondents the Office of the Executive Secretary and the Department of Foreign Affairs to transmit the signed text of the treaty to theSenate of the Philippines for ratification.It is the theory of the petitioners that ratification of a treaty, under both domestic law and international law, is a function of the Senate. Hence, it is the duty of the executive department totransmit the signed copy of the Rome Statute to the Senate to allow it to exercise its discretion with respect to ratification of treaties. Moreover, petitioners submit that the Philippines has aministerial duty to ratify the Rome Statute under treaty law and customary international law. Petitioners invoke the Vienna Convention on the Law of Treaties enjoining the states to refrain fromacts which would defeat the object and purpose of a treaty when they have signed the treaty prior to ratification unless they have made their intention clear not to become parties to the treaty. 5The Office of the Solicitor General, commenting for the respondents, questioned the standing of the petitioners to file the instant suit. It also contended that the petition at bar violates the ruleon hierarchy of courts. On the substantive issue raised by petitioners, respondents argue that the executive department has no duty to transmit the Rome Statute to the Senate forconcurrence.A petition for mandamus may be filed when any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resultingfrom an office, trust, or station.6We have held that to be given due course, a petition for mandamus must have been instituted by a party aggrieved by the alleged inaction of any tribunal,corporation, board or person which unlawfully excludes said party from the enjoyment of a legal right. The petitioner in every case must therefore be an aggrieved party in the sense that hepossesses a clear legal right to be enforced and a direct interest in the duty or act to be performed. 7 The Court will exercise its power of judicial review only if the case is brought before it by aparty who has the legal standing to raise the constitutional or legal question. "Legal standing" means a personal and substantial interest in the case such that the party has sustained or willsustain direct injury as a result of the government act that is being challenged. The term "interest" is material interest, an interest in issue and to be affected by the decree, as distinguishedfrom mere interest in the question involved, or a mere incidental interest.8The petition at bar was filed by Senator Aquilino Pimentel, Jr. who asserts his legal standing to file the suit as member of the Senate; Congresswoman Loretta Ann Rosales, a member of theHouse of Representatives and Chairperson of its Committee on Human Rights; the Philippine Coalition for the Establishment of the International Criminal Court which is composed ofindividuals and corporate entities dedicated to the Philippine ratification of the Rome Statute; the Task Force Detainees of the Philippines, a juridical entity with the avowed purpose ofpromoting the cause of human rights and human rights victims in the country; the Families of Victims of Involuntary Disappearances, a juridical entity duly organized and existing pursuant toPhilippine Laws with the avowed purpose of promoting the cause of families and victims of human rights violations in the country; Bianca Hacintha Roque and Harrison Jacob Roque, aged two(2) and one (1), respectively, at the time of filing of the instant petition, and suing under the doctrine of inter-generational rights enunciated in the case of Oposa vs. Factoran, Jr.;9 and a groupof fifth year working law students from the University of the Philippines College of Law who are suing as taxpayers.The question in standing is whether a party has alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation ofissues upon which the court so largely depends for illumination of difficult constitutional questions. 10We find that among the petitioners, only Senator Pimentel has the legal standing to file the instant suit. The other petitioners maintain their standing as advocates and defenders of humanrights, and as citizens of the country. They have not shown, however, that they have sustained or will sustain a direct injury from the non-transmittal of the signed text of the Rome Statute tothe Senate. Their contention that they will be deprived of their remedies for the protection and enforcement of their rights does not persuade. The Rome Statute is intended to complementnational criminal laws and courts. Sufficient remedies are available under our national laws to protect our citizens against human rights violations and petitioners can always seek redress forany abuse in our domestic courts.As regards Senator Pimentel, it has been held that "to the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate inthe exercise of the powers of that institution."11 Thus, legislators have the standing to maintain inviolate the prerogatives, powers and privileges vested by the Constitution in their office and areallowed to sue to question the validity of any official action which they claim infringes their prerogatives as legislators. The petition at bar invokes the power of the Senate to grant or withholdits concurrence to a treaty entered into by the executive branch, in this case, the Rome Statute. The petition seeks to order the executive branch to transmit the copy of the treaty to the Senateto allow it to exercise such authority. Senator Pimentel, as member of the institution, certainly has the legal standing to assert such authority of the Senate.We now go to the substantive issue.

The core issue in this petition for mandamus is whether the Executive Secretary and the Department of Foreign Affairs have a ministerial duty to transmit to the Senate the copy of the RomeStatute signed by a member of the Philippine Mission to the United Nations even without the signature of the President.We rule in the negative.In our system of government, the President, being the head of state, is regarded as the sole organ and authority in external relations and is the countrys sole representative with foreignnations.12 As the chief architect of foreign policy, the President acts as the countrys mouthpiece with respect to international affairs. Hence, the President is vested with the authority to dealwith foreign states and governments, extend or withhold recognition, maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign relations. 13 In the realm oftreaty-making, the President has the sole authority to negotiate with other states.Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the Constitution provides a limitation to his power by requiring the concurrence of 2/3 of all themembers of the Senate for the validity of the treaty entered into by him. Section 21, Article VII of the 1987 Constitution provides that "no treaty or international agreement shall be valid andeffective unless concurred in by at least two-thirds of all the Members of the Senate." The 1935 and the 1973 Constitution also required the concurrence by the legislature to the treatiesentered into by the executive. Section 10 (7), Article VII of the 1935 Constitution provided:Sec. 10. (7) The President shall have the power, with the concurrence of two-thirds of all the Members of the Senate, to make treaties xxx.Section 14 (1) Article VIII of the 1973 Constitution stated:Sec. 14. (1) Except as otherwise provided in this Constitution, no treaty shall be valid and effective unless concurred in by a majority of all the Members of the Batasang Pambansa.The participation of the legislative branch in the treaty-making process was deemed essential to provide a check on the executive in the field of foreign relations. 14 By requiring the concurrenceof the legislature in the treaties entered into by the President, the Constitution ensures a healthy system of checks and balance necessary in the nations pursuit of political maturity andgrowth.15In filing this petition, the petitioners interpret Section 21, Article VII of the 1987 Constitution to mean that the power to ratify treaties belongs to the Senate.We disagree.Justice Isagani Cruz, in his book on International Law, describes the treaty-making process in this wise:The usual steps in the treaty-making process are: negotiation, signature, ratification, and exchange of the instruments of ratification. The treaty may then be submitted for registration andpublication under the U.N. Charter, although this step is not essential to the validity of the agreement as between the parties.Negotiation may be undertaken directly by the head of state but he now usually assigns this task to his authorized representatives. These representatives are provided with credentials knownas full powers, which they exhibit to the other negotiators at the start of the formal discussions. It is standard practice for one of the parties to submit a draft of the proposed treaty which,together with the counter-proposals, becomes the basis of the subsequent negotiations. The negotiations may be brief or protracted, depending on the issues involved, and may even"collapse" in case the parties are unable to come to an agreement on the points under consideration.If and when the negotiators finally decide on the terms of the treaty, the same is opened for signature. This step is primarily intended as a means of authenticating the instrument and for thepurpose of symbolizing the good faith of the parties; but, significantly, it does not indicate the final consent of the state in cases where ratification of the treaty is required. Thedocument is ordinarily signed in accordance with the alternat, that is, each of the several negotiators is allowed to sign first on the copy which he will bring home to his own state.Ratification, which is the next step, is the formal act by which a state confirms and accepts the provisions of a treaty concluded by its representatives. The purpose of ratification is to enablethe contracting states to examine the treaty more closely and to give them an opportunity to refuse to be bound by it should they find it inimical to their interests. It is for thisreason that most treaties are made subject to the scrutiny and consent of a department of the government other than that which negotiated them.xxxThe last step in the treaty-making process is the exchange of the instruments of ratification, which usually also signifies the effectivity of the treaty unless a different date has been agreed uponby the parties. Where ratification is dispensed with and no effectivity clause is embodied in the treaty, the instrument is deemed effective upon its signature. 16 [emphasis supplied]Petitioners arguments equate the signing of the treaty by the Philippine representative with ratification. It should be underscored that the signing of the treaty and the ratification are twoseparate and distinct steps in the treaty-making process. As earlier discussed, the signature is primarily intended as a means of authenticating the instrument and as a symbol of the good faithof the parties. It is usually performed by the states authorized representative in the diplomatic mission. Ratification, on the other hand, is the formal act by which a state confirms and acceptsthe provisions of a treaty concluded by its representative. It is generally held to be an executive act, undertaken by the head of the state or of the government. 17 Thus, Executive Order No. 459issued by President Fidel V. Ramos on November 25, 1997 provides the guidelines in the negotiation of international agreements and its ratification. It mandates that after the treaty has beensigned by the Philippine representative, the same shall be transmitted to the Department of Foreign Affairs. The Department of Foreign Affairs shall then prepare the ratification papers andforward the signed copy of the treaty to the President for ratification. After the President has ratified the treaty, the Department of Foreign Affairs shall submit the same to the Senate forconcurrence. Upon receipt of the concurrence of the Senate, the Department of Foreign Affairs shall comply with the provisions of the treaty to render it effective. Section 7 of Executive OrderNo. 459 reads:Sec. 7. Domestic Requirements for the Entry into Force of a Treaty or an Executive Agreement. The domestic requirements for the entry into force of a treaty or an executiveagreement, or any amendment thereto, shall be as follows:A. Executive Agreements.

i. All executive agreements shall be transmitted to the Department of Foreign Affairs after their signing for the preparation of the ratification papers. The transmittal shall include the highlights ofthe agreements and the benefits which will accrue to the Philippines arising from them.ii. The Department of Foreign Affairs, pursuant to the endorsement by the concerned agency, shall transmit the agreements to the President of the Philippines for his ratification. The originalsigned instrument of ratification shall then be returned to the Department of Foreign Affairs for appropriate action.B. Treaties.i. All treaties, regardless of their designation, shall comply with the requirements provided in sub-paragraph[s] 1 and 2, item A (Executive Agreements) of this Section. In addition, theDepartment of Foreign Affairs shall submit the treaties to the Senate of the Philippines for concurrence in the ratification by the President. A certified true copy of the treaties, in such numbersas may be required by the Senate, together with a certified true copy of the ratification instrument, shall accompany the submission of the treaties to the Senate.ii. Upon receipt of the concurrence by the Senate, the Department of Foreign Affairs shall comply with the provision of the treaties in effecting their entry into force.Petitioners submission that the Philippines is bound under treaty law and international law to ratify the treaty which it has signed is without basis. The signature does not signify the finalconsent of the state to the treaty. It is the ratification that binds the state to the provisions thereof. In fact, the Rome Statute itself requires that the signature of the representatives of the statesbe subject to ratification, acceptance or approval of the signatory states. Ratification is the act by which the provisions of a treaty are formally confirmed and approved by a State. By ratifying atreaty signed in its behalf, a state expresses its willingness to be bound by the provisions of such treaty. After the treaty is signed by the states representative, the President, being accountableto the people, is burdened with the responsibility and the duty to carefully study the contents of the treaty and ensure that they are not inimical to the interest of the state and its people. Thus,the President has the discretion even after the signing of the treaty by the Philippine representative whether or not to ratify the same. The Vienna Convention on the Law of Treaties does notcontemplate to defeat or even restrain this power of the head of states. If that were so, the requirement of ratification of treaties would be pointless and futile. It has been held that a state hasno legal or even moral duty to ratify a treaty which has been signed by its plenipotentiaries. 18 There is no legal obligation to ratify a treaty, but it goes without saying that the refusal must bebased on substantial grounds and not on superficial or whimsical reasons. Otherwise, the other state would be justified in taking offense. 19It should be emphasized that under our Constitution, the power to ratify is vested in the President, subject to the concurrence of the Senate. The role of the Senate, however, is limited only togiving or withholding its consent, or concurrence, to the ratification.20 Hence, it is within the authority of the President to refuse to submit a treaty to the Senate or, having secured its consent forits ratification, refuse to ratify it.21 Although the refusal of a state to ratify a treaty which has been signed in its behalf is a serious step that should not be taken lightly, 22 such decision is withinthe competence of the President alone, which cannot be encroached by this Court via a writ ofmandamus. This Court has no jurisdiction over actions seeking to enjoin the President in theperformance of his official duties.23 The Court, therefore, cannot issue the writ of mandamus prayed for by the petitioners as it is beyond its jurisdiction to compel the executive branch of thegovernment to transmit the signed text of Rome Statute to the Senate.IN VIEW WHEREOF, the petition is DISMISSED.SO ORDERED.REYNATO S. PUNO

G.R. No. 106064 October 13, 2005

Spouses Renato Constantino, Jr. and Lourdes Constantino and their minor children Renato Redentor, Anna Marika Lissa, Nina Elissa, and Anna Karmina, Freedom From DebtCoalition, and Filomeno Sta. Ana III, Petitioners,vs.Hon. Jose B. Cuisia, in his capacity as Governor of the Central Bank, Hon. Ramon del Rosario, in his capacity as Secretary of Finance, Hon. Emmanuel V. Pelaez, in his capacityas Philippine Debt Negotiating Chairman, and the NATIONAL TREASURER, Respondents.DECISIONTinga, J.:The quagmire that is the foreign debt problem has especially confounded developing nations around the world for decades. It has defied easy solutions acceptable both to debtor countriesand their creditors. It has also emerged as cause celebre for various political movements and grassroots activists and the wellspring of much scholarly thought and debate.The present petition illustrates some of the ideological and functional differences between experts on how to achieve debt relief. However, this being a court of law, not an academic forum or aconvention on development economics, our resolution has to hinge on the presented legal issues which center on the appreciation of the constitutional provision that empowers the Presidentto contract and guarantee foreign loans. The ultimate choice is between a restrictive reading of the constitutional provision and an alimentative application thereof consistent with time-honoredprinciples on executive power and the alter ego doctrine.This Petition for Certiorari, Prohibition and Mandamus assails said contracts which were entered into pursuant to the Philippine Comprehensive Financing Program for 1992 ("FinancingProgram" or "Program"). It seeks to enjoin respondents from executing additional debt-relief contracts pursuant thereto. It also urges the Court to issue an order compelling the Secretary ofJustice to institute criminal and administrative cases against respondents foracts which circumvent or negate the provisions Art. XII of the Constitution. 1Parties and FactsThe petition was filed on 17 July 1992 by petitioners spouses Renato Constantino, Jr. and Lourdes Constantino and their minor children, Renato Redentor, Anna Marika Lissa, Nina Elissa, andAnna Karmina, Filomeno Sta. Ana III, and the Freedom from Debt Coalition, a non-stock, non-profit, non-government organization that advocates a "pro-people and just Philippine debtpolicy."2 Named respondents were the then Governor of the Bangko Sentral ng Pilipinas, the Secretary of Finance, the National Treasurer, and the Philippine Debt Negotiation ChairmanEmmanuel V. Pelaez.3 All respondents were members of the Philippine panel tasked to negotiate with the countrys foreign creditors pursuant to the Financing Program.The operative facts are sparse and there is little need to elaborate on them.The Financing Program was the culmination of efforts that began during the term of former President Corazon Aquino to manage the countrys external debt problem through a negotiationoriented debt strategy involving cooperation and negotiation with foreign creditors. 4 Pursuant to this strategy, the Aquino government entered into three restructuring agreements withrepresentatives of foreign creditor governments during the period of 1986 to 1991. 5 During the same period, three similarly-oriented restructuring agreements were executed with commercialbank creditors.6On 28 February 1992, the Philippine Debt Negotiating Team, chaired by respondent Pelaez, negotiated an agreement with the countrys Bank Advisory Committee, representing all foreigncommercial bank creditors, on the Financing Program which respondents characterized as "a multi-option financingpackage."7 The Program was scheduled to be executed on 24 July 1992 by respondents in behalf of the Republic. Nonetheless, petitioners alleged that even prior to the execution of theProgram respondents had already implemented its "buyback component" when on 15 May 1992, the Philippines bought back P1.26 billion of external debts pursuant to the Program.8The petition sought to enjoin the ratification of the Program, but the Court did not issue any injunctive relief. Hence, it came to pass that the Program was signed in London as scheduled. Thepetition still has to be resolved though as petitioners seek the annulment "ofany and all acts done by respondents, their subordinates and any other public officer pursuant to the agreement and program in question." 9 Even after the signing of the Program, respondentsthemselves acknowledged that the remaining principal objective of the petition is to set aside respondents actions. 10Petitioners characterize the Financing Program as a package offered to the countrys foreign creditors consisting of two debt-relief options. 11 The first option was a cash buyback of portions ofthe Philippine foreign debt at a discount.12 The second option allowed creditors to convert existing Philippine debt instruments into any of three kinds of bonds/securities: (1) new money bondswith a five-year grace period and 17 years final maturity, the purchase of which would allow the creditors to convert their eligible debt papers into bearer bonds with the same terms; (2)interest-reduction bonds with a maturity of 25 years; and (3) principal-collateralized interest-reduction bonds with a maturity of 25 years. 13On the other hand, according to respondents the Financing Program would cover about U.S. $5.3 billion of foreign commercial debts and it was expected to deal comprehensively with thecommercial bank debt problem of the country and pave the way for the countrys access to capital markets. 14 They add that the Program carried three basic options from which foreign banklenders could choose, namely: to lend money, to exchange existing restructured Philippine debts with an interest reduction bond; or to exchange the same Philippine debts with a principalcollateralized interest reduction bond.15Issues for ResolutionPetitioners raise several issues before this Court.First, they object to the debt-relief contracts entered into pursuant to the Financing Program as beyond the powers granted to the President under Section 20,

Article VII of the Constitution.16 The provision states that the President may contract or guarantee foreign loans in behalf of the Republic. It is claimed that the buyback and securitization/bondconversion schemes are neither "loans" nor "guarantees," and hence beyond the power of the President to execute.Second, according to petitioners even assuming that the contracts under the Financing Program are constitutionally permissible, yet it is only the President who may exercise the power toenter into these contracts and such power may not be delegated to respondents.Third, petitioners argue that the Financing Program violates several constitutional policies and that contracts executed or to be executed pursuant thereto were or will be done by respondentswith grave abuse of discretion amounting to lack or excess of jurisdiction.Petitioners contend that the Financing Program was made available for debts that were either fraudulently contracted or void. In this regard, petitioners rely on a 1992 Commission on Audit(COA) report which identified several "behest" loans as either contracted or guaranteed fraudulently during the Marcos regime. 17 They posit that since these and other similar debts, such asthe ones pertaining to the Bataan Nuclear Power Plant, 18 were eligible for buyback or conversion under the Program, the resultant relief agreements pertaining thereto would be void for beingwaivers of the Republics right to repudiate the void or fraudulently contracted loans.For their part, respondents dispute the points raised by petitioners. They also question the standing of petitioners to institute the present petition and the justiciability of the issues presented.The Court shall tackle the procedural questions ahead of the substantive issues.The Courts RulingsStanding of PetitionersThe individual petitioners are suing as citizens of the Philippines; those among them who are of age are suing in their additional capacity as taxpayers. 19 It is not indicated in what capacity theFreedom from Debt Coalition is suing.Respondents point out that petitioners have no standing to file the present suit since the rule allowing taxpayers to assail executive or legislative acts has been applied only to cases where theconstitutionality of a statute is involved. At the same time, however, they urge this Court to exercise its wide discretion and waive petitioners lack of standing. They invoke the transcendentalimportance of resolving the validity of the questioned debt-relief contracts and others of similar import.The recent trend on locus standi has veered towards a liberal treatment in taxpayers suits. In Tatad v. Garcia Jr.,20 this Court reiterated that the "prevailing doctrines in taxpayers suits are toallow taxpayers to question contracts entered into by the national government or government owned and controlled corporations allegedly in contravention of law." 21 A taxpayer is allowed tosue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that there is a wastage of public funds through theenforcement of an invalid or unconstitutional law.22Moreover, a ruling on the issues of this case will not only determine the validity or invalidity of the subject pre-termination and bond-conversion of foreign debts but also create a precedent forother debts or debt-related contracts executed or to be executed in behalf of the President of the Philippines by the Secretary of Finance. Considering the reported Philippine debt of P3.80trillion as of November 2004, the foreign public borrowing component of which reached P1.81 trillion in November, equivalent to 47.6% of total government borrowings, 23the importance of theissues raised and the magnitude of the public interest involved are indubitable.Thus, the Courts cognizance of this petition is also based on the consideration that the determination of the issues presented will have a bearing on the state of the countrys economy, itsinternational financial ratings, and perhaps even the Filipinos way of life. Seen in this light, the transcendental importance of the issues herein presented cannot be doubted.Where constitutional issues are properly raised in the context of alleged facts, procedural questions acquire a relatively minor significance. 24 We thus hold that by the very nature of the powerwielded by the President, the effect of using this power on the economy, and the well-being in general of the Filipino nation, the Court must set aside the procedural barrier of standing and ruleon the justiciable issues presented by the parties.Ripeness/Actual Case DimensionEven as respondents concede the transcendental importance of the issues at bar, in their Rejoinder they ask this Court to dismiss the Petition. Allegedly, petitioners arguments are mereattempts at abstraction.25 Respondents are correct to some degree. Several issues, as shall be discussed in due course, are not ripe for adjudication.The allegation that respondents waived the Philippines right to repudiate void and fraudulently contracted loans by executing the debt-relief agreements is, on many levels, not justiciable.In the first place, records do not show whether the so-called behest loansor other allegedly void or fraudulently contracted loans for that matterwere subject of the debt-relief contractsentered into under the Financing Program.Moreover, asserting a right to repudiate void or fraudulently contracted loans begs the question of whether indeed particular loans are void or fraudulently contracted. Fraudulently contractedloans are voidable and, as such, valid and enforceable until annulled by the courts. On the other hand, void contracts that have already been fulfilled must be declared void in view of themaxim that no one is allowed to take the law in his own hands. 26 Petitioners theory depends on a prior annulment or declaration of nullity of the pre-existing loans, which thus far have notbeen submitted to this Court. Additionally, void contracts are unratifiable by their very nature; they are null and void ab initio. Consequently, from the viewpoint of civil law, what petitionerspresent as the Republics "right to repudiate" is yet a contingent right, one which cannot be allowed as an anticipatory basis for annulling the debt-relief contracts. Petitioners contention thatthe debt-relief agreements are tantamount to waivers of the Republics "right to repudiate" so-called behest loans is without legal foundation.It may not be amiss to recognize that there are many advocates of the position that the Republic should renege on obligations that are considered as "illegitimate." However, should theexecutive branch unilaterally, and possibly even without prior court determination of the validity or invalidity of these contracts, repudiate or otherwise declare to the international community its

resolve not to recognize a certain set of "illegitimate" loans, adverse repercussions 27 would come into play. Dr. Felipe Medalla, former Director General of the National Economic DevelopmentAuthority, has warned, thus:One way to reduce debt service is to repudiate debts, totally or selectively. Taken to its limit, however, such a strategy would put the Philippines at such odds with too many enemies. Foreigncommercial banks by themselves and without the cooperation of creditor governments, especially the United States, may not be in a position to inflict much damage, but concerted sanctionsfrom commercial banks, multilateral financial institutions and creditor governments would affect not only our sources of credit but also our access to markets for our exports and the level ofdevelopment assistance. . . . [T]he country might face concerted sanctions even if debts were repudiated only selectively.The point that must be stressed is that repudiation is not an attractive alternative if net payments to creditors in the short and medium-run can be reduced through an agreement (as opposedto a unilaterally set ceiling on debt service payments) which provides for both rescheduling of principal and capitalization of interest, or its equivalent in new loans, which would make it easierfor the country to pay interest.28Sovereign default is not new to the Philippine setting. In October 1983, the Philippines declared a moratorium on principal payments on its external debts that eventuallylasted four years,29 that virtually closed the countrys access to new foreign money 30 and drove investors to leave the Philippine market, resulting in some devastating consequences. 31 It wouldappear then that this beguilingly attractive and dangerously simplistic solution deserves the utmost circumspect cogitation before it is resorted to.In any event, the discretion on the matter lies not with the courts but with the executive. Thus, the Program was conceptualized as an offshoot of the decision made by thenPresident Aquino that the Philippines should recognize its sovereign debts 32 despite the controversy that engulfed many debts incurred during the Marcos era. It is a scheme whereby thePhilippines restructured its debts following a negotiated approach instead of a default approach to manage the bleak Philippine debt situation.As a final point, petitioners have no real basis to fret over a possible waiver of the right to repudiate void contracts. Even assuming that spurious loans had become the subject of debt-reliefcontracts, respondents unequivocally assert that the Republic did not waive any right to repudiate void or fraudulently contracted loans, it having incorporated a "no-waiver" clause in theagreements.33Substantive IssuesIt is helpful to put the matter in perspective before moving on to the merits. The Financing Program extinguished portions of the countrys pre-existing loansthrough either debt buyback or bond-conversion. The buyback approach essentially pre-terminated portions of public debts while the bond-conversion scheme extinguished public debtsthrough the obtention of a new loan by virtue of a sovereign bond issuance, the proceeds of which in turn were used for terminating the original loan.First Issue: The Scope of Section 20, Article VIIFor their first constitutional argument, petitioners submit that the buyback and bond-conversion schemes do not constitute the loan "contract" or "guarantee" contemplated in the Constitutionand are consequently prohibited. Sec. 20, Art. VII of the Constitution provides, viz:The President may contract or guarantee foreign loans in behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board and subject to such limitations as may beprovided under law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decisions on applicationsfor loans to be contracted or guaranteed by the government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing othermatters as may be provided by law.On Bond-conversionLoans are transactions wherein the owner of a property allows another party to use the property and where customarily, the latter promises to return the property after a specified period withpayment for its use, called interest. 34 On the other hand, bonds are interest-bearing or discounted government or corporate securities that obligate the issuer to pay the bondholder a specifiedsum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity. 35 The word "bond" means contract, agreement, or guarantee. All of these terms areapplicable to the securities known as bonds. An investor who purchases a bond is lending money to the issuer, and the bond represents the issuers contractual promise to pay interest andrepay principal according to specific terms. A short-term bond is often called a note.36The language of the Constitution is simple and clear as it is broad. It allows the President to contract and guarantee foreign loans. It makes no prohibition on the issuance of certain kinds ofloans or distinctions as to which kinds of debt instruments are more onerous than others. This Court may not ascribe to the Constitution meanings and restrictions that would unduly burden thepowers of the President. The plain, clear and unambiguous language of the Constitution should be construed in a sense that will allow the full exercise of the power provided therein. It wouldbe the worst kind of judicial legislation if the courts were to misconstrue and change the meaning of the organic act.The only restriction that the Constitution provides, aside from the prior concurrence of the Monetary Board, is that the loans must be subject to limitations provided by law. In this regard, wenote that Republic Act (R.A.) No. 245 as amended by Pres. Decree (P.D.) No. 142, s. 1973, entitled An Act Authorizing the Secretary of Finance to Borrow to Meet Public ExpendituresAuthorized by Law, and for Other Purposes, allows foreign loans to be contracted in the form of, inter alia, bonds. Thus:Sec. 1. In order to meet public expenditures authorized by law or to provide for the purchase, redemption, or refunding of any obligations, either direct or guaranteed of the PhilippineGovernment, the Secretary of Finance, with the approval of the President of the Philippines, after consultation with the Monetary Board, is authorized to borrow from time to timeon the credit of the Republic of the Philippines such sum or sums as in his judgment may be necessary, and to issue therefor evidences of indebtedness of the PhilippineGovernment."Such evidences of indebtedness may be of the following types:

....c. Treasury bonds, notes, securities or other evidences of indebtedness having maturities of one year or more but not exceeding twenty-five years from the date ofissue. (Emphasis supplied.)Under the foregoing provisions, sovereign bonds may be issued not only to supplement government expenditures but also to provide for the purchase, 37 redemption,38 or refunding39 of anyobligation, either direct or guaranteed, of the Philippine Government.Petitioners, however, point out that a supposed difference between contracting a loan and issuing bonds is that the former creates a definite creditor-debtor relationship between the partieswhile the latter does not.40 They explain that a contract of loan enables the debtor to restructure or novate the loan, which benefit is lost upon the conversion of the debts to bearer bonds suchthat "the Philippines surrenders the novatable character of a loan contract for the irrevocable and unpostponable demandability of a bearer bond." 41 Allegedly, the Constitution prohibits thePresident from issuing bonds which are "far more onerous" than loans.42This line of thinking is flawed to say the least. The negotiable character of the subject bonds is not mutually exclusive with the Republics freedom to negotiate with bondholders for the revisionof the terms of the debt. Moreover, the securities market provides some flexibilityif the Philippines wants to pay in advance, it can buy out its bonds in the market; if interest rates go down butthe Philippines does not have money to retire the bonds, it can replace the old bonds with new ones; if it defaults on the bonds, the bondholders shall organize and bring about a re-negotiationor settlement.43 In fact, several countries have restructured their sovereign bonds in view either ofinability and/or unwillingness to pay the indebtedness.44 Petitioners have not presented a plausible reason that would preclude the Philippines from acting in a similar fashion, should it so opt.This theory may even be dismissed in a perfunctory manner since petitioners are merely expecting that the Philippines would opt to restructure the bonds but with the negotiable character ofthe bonds, would be prevented from so doing. This is a contingency which petitioners do not assert as having come to pass or even imminent. Consummated acts of the executive cannot bestruck down by this Court merely on the basis of petitioners anticipatory cavils.On the Buyback SchemeIn their Comment, petitioners assert that the power to pay public debts lies with Congress and was deliberatelywithheld by the Constitution from the President. 45 It is true that in the balance of power between the three branches of government, it is Congress that manages the countrys coffers by virtueof its taxing and spending powers. However, the law-making authority has promulgated a law ordaining an automatic appropriations provision for debt servicing 46 by virtue of which thePresident is empowered to execute debt payments without the need for further appropriations. Regarding these legislative enactments, this Court has held, viz:Congress deliberates or acts on the budget proposals of the President, and Congress in the exercise of its own judgment and wisdom formulates an appropriation act precisely following theprocess established by the Constitution, which specifies that no money may be paid from the Treasury except in accordance with an appropriation made by law.Debt service is not included in the General Appropriation Act, since authorization therefor already exists under RA Nos. 4860 and 245, as amended, and PD 1967. Precisely in the light of thissubsisting authorization as embodied in said Republic Acts and PD for debt service, Congress does not concern itself with details for implementation by the Executive, but largely with annuallevels and approval thereof upon due deliberations as part of the whole obligation program for the year. Upon such approval, Congress has spoken and cannot be said to have delegated itswisdom to the Executive, on whose part lies the implementation or execution of the legislative wisdom. 47Specific legal authority for the buyback of loans is established under Section 2 of Republic Act (R.A.) No. 240, viz:Sec. 2. The Secretary of Finance shall cause to be paid out of any moneys in the National Treasury not otherwise appropriated, or from any sinking funds provided for thepurpose by law, any interest falling due, or accruing, on any portion of the public debt authorized by law. He shall also cause to be paid out of any such money, or from any suchsinking funds the principal amount of any obligations which have matured, or which have been called for redemption or for which redemption has been demanded in accordance withterms prescribed by him prior to date of issue: Provided, however, That he may, if he so chooses and if the holder is willing, exchange any such obligation with any other direct or guaranteedobligation or obligations of the Philippine Government of equivalent value. In the case of interest-bearing obligations, he shall pay not less than their face value; in the case of obligationsissued at a discount he shall pay the face value at maturity; or, if redeemed prior to maturity, such portion of the face value as is prescribed by the terms and conditions under whichsuch obligations were originally issued. (Emphasis supplied.)The afore-quoted provisions of law specifically allow the President to pre-terminate debts without further action from Congress.Petitioners claim that the buyback scheme is neither a guarantee nor a loan since its underlying intent is to extinguish debts that are not yet due and demandable. 48 Thus, they suggest thatcontracts entered pursuant to the buyback scheme are unconstitutional for not being among those contemplated in Sec. 20, Art. VII of the Constitution.Buyback is a necessary power which springs from the grant of the foreign borrowing power. Every statute is understood, by implication, to contain all such provisions as may be necessary toeffectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly andlogically inferred from its terms.49 The President is not empowered to borrow money from foreign banks and governments on the credit of the Republic only to be left bereft of authority toimplement the payment despite appropriations therefor.Even petitioners concede that "[t]he Constitution, as a rule, does not enumeratelet alone enumerate allthe acts which the President (or any other public officer) may notdo,"50 and "[t]he fact that the Constitution does not explicitly bar the President from exercising a power does not mean that he or she does not have that power." 51 It is inescapable from thestandpoint of reason and necessity that the authority to contract foreign loans and guarantees without restrictions on payment or manner thereof coupled with the availability of thecorresponding appropriations, must include the power to effect payments or to make payments unavailing by either restructuring the loans or even refusing to make any payment altogether.

More fundamentally, when taken in the context of sovereign debts, a buyback is simply the purchase by the sovereign issuer of its own debts at a discount. Clearly then, the objection to thevalidity of the buyback scheme is without basis.Second Issue: Delegation of PowerPetitioners stress that unlike other powers which may be validly delegated by the President, the power to incur foreign debts is expressly reserved by the Constitution in the person of thePresident. They argue that the gravity by which the exercise of the power will affect the Filipino nation requires that the President alone must exercise this power. They submit that therequirement of prior concurrence of an entity specifically named by the Constitutionthe Monetary Boardreinforces the submission that not respondents but the President "alone andpersonally" can validly bind the country.Petitioners position is negated both by explicit constitutional52 and legal53 imprimaturs, as well as the doctrine of qualified political agency.The evident exigency of having the Secretary of Finance implement the decision of the President to execute the debt-relief contracts is made manifest by the fact that the process ofestablishing and executing a strategy for managing the governments debt is deep within the realm of the expertise of the Department of Finance, primed as it is to raise the required amount offunding, achieve its risk and cost objectives, and meet any other sovereign debt management goals.54If, as petitioners would have it, the President were to personally exercise every aspect of the foreign borrowing power, he/she would have to pause from running the country long enough tofocus on a welter of time-consuming detailed activitiesthe propriety of incurring/guaranteeing loans, studying and choosing among the many methods that may be taken toward this end,meeting countless times with creditor representatives to negotiate, obtaining the concurrence of the Monetary Board, explaining and defending the negotiated deal to the public, and moreoften than not, flying to the agreed place of execution to sign the documents. This sort of constitutional interpretation would negate the very existence of cabinet positions and the respectiveexpertise which the holders thereof are accorded and would unduly hamper the Presidents effectivity in running the government.Necessity thus gave birth to the doctrine of qualified political agency, later adopted in Villena v. Secretary of the Interior55 from American jurisprudence, viz:With reference to the Executive Department of the government, there is one purpose which is crystal-clear and is readily visible without the projection of judicial searchlight, and that is theestablishment of a single, not plural, Executive. The first section of Article VII of the Constitution, dealing with the Executive Department, begins with the enunciation of the principle that "Theexecutive power shall be vested in a President of the Philippines." This means that the President of the Philippines is the Executive of the Government of the Philippines, and no other. Theheads of the executive departments occupy political positions and hold office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the President's bosomconfidence" (7 Writings, Ford ed., 498), and, in the language of Attorney-General Cushing (7 Op., Attorney-General, 453), "are subject to the direction of the President." Without minimizing theimportance of the heads of the various departments, their personality is in reality but the projection of that of the President. Stated otherwise, and as forcibly characterized by Chief Justice Taftof the Supreme Court of the United States, "each head of a department is, and must be, the President's alter ego in the matters of that department where the President is required by law toexercise authority" (Myers vs. United States, 47 Sup. Ct. Rep., 21 at 30; 272 U. S., 52 at 133; 71 Law. ed., 160). 56As it was, the backdrop consisted of a major policy determination made by then President Aquino that sovereign debts have to be respected and the concomitant reality that the Philippines didnot have enough funds to pay the debts. Inevitably, it fell upon the Secretary of Finance, as the alter ego of the President regarding "the sound and efficient management of the financialresources of the Government,"57 to formulate a scheme for the implementation of the policy publicly expressed by the President herself.Nevertheless, there are powers vested in the President by the Constitution which may not be delegated to or exercised by an agent or alter ego of the President. Justice Laurel, inhis ponencia in Villena, makes this clear:Withal, at first blush, the argument of ratification may seem plausible under the circumstances, it should be observed that there are certain acts which, by their very nature, cannot be validatedby subsequent approval or ratification by the President. There are certain constitutional powers and prerogatives of the Chief Executive of the Nation which must be exercised by him in personand no amount of approval or ratification will validate the exercise of any of those powers by any other person. Such, for instance, in his power to suspend the writ of habeas corpus andproclaim martial law (PAR. 3, SEC. 11, Art. VII) and the exercise by him of the benign prerogative of mercy (par. 6, sec. 11, idem). 58These distinctions hold true to this day. There are certain presidential powers which arise out of exceptional circumstances, and if exercised, would involve the suspension of fundamentalfreedoms, or at least call for the supersedence of executive prerogatives over those exercised by co-equal branches of government. The declaration of martial law, the suspension of the writ ofhabeas corpus, and the exercise of the pardoning power notwithstanding the judicial determination of guilt of the accused, all fall within this special class that demands the exclusive exerciseby the President of the constitutionally vested power. The list is by no means exclusive, but there must be a showing that the executive power in question is of similar gravitas and exceptionalimport.We cannot conclude that the power of the President to contract or guarantee foreign debts falls within the same exceptional class. Indubitably, the decision to contract or guarantee foreigndebts is of vital public interest, but onlyakin to any contractual obligation undertaken by the sovereign, which arises not from any extraordinary incident, but from the established functions of governance.Another important qualification must be made. The Secretary of Finance or any designated alter ego of the President is bound to secure the latters prior consent to or subsequent ratificationof his acts. In the matter of contracting or guaranteeing foreign loans, the repudiation by the President of the very acts performed in this regard by the alter ego will definitely have bindingeffect. Had petitioners herein succeeded in demonstrating that the President actually withheld approval and/or repudiated the Financing Program, there could be a cause of action to nullify theacts of respondents. Notably though, petitioners do not assert that respondents pursued the Program without prior authorization of the President or that the terms of the contract were agreedupon without the Presidents authorization. Congruent with the avowed preference of then President Aquino to honor and restructure existing foreign debts, the lack of showing that shecountermanded the acts of respondents leads us to conclude that said acts carried presidential approval.With constitutional parameters already established, we may also note, as a source of suppletory guidance, the provisions of R.A. No. 245. The afore-quoted Section 1 thereof empowers theSecretary of Finance with the approval of the President and after consultation 59 of the Monetary Board, "to borrow from time to time on the credit of the Republic of the Philippines such sum orsums as in his judgment may be necessary, and to issue therefor evidences of indebtedness of the Philippine Government." Ineluctably then, while the President wields the borrowing power itis the Secretary of Finance who normally carries out its thrusts.

In our recent rulings in Southern Cross Cement Corporation v. The Philippine Cement Manufacturers Corp.,60 this Court had occasion to examine the authority granted by Congress to theDepartment of Trade and Industry (DTI) Secretary to impose safeguard measures pursuant to the Safeguard Measures Act. In doing so, the Court was impelled to construe Section 28(2),Article VI of the Constitution, which allowed Congress, by law, to authorize the President to "fix within specified limits, and subject to such limitations and restrictions as it may impose, tariffrates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government." 61While the Court refused to uphold the broad construction of the grant of power as preferred by the DTI Secretary, it nonetheless tacitly acknowledged that Congress could designate the DTISecretary, in his capacity as alter egoof the President, to exercise the authority vested on the chief executive under Section 28(2), Article VI. 62 At the same time, the Court emphasized thatsince Section 28(2), Article VI authorized Congress to impose limitations and restrictions on the authority of the President to impose tariffs and imposts, the DTI Secretary was necessarilysubjected to the same restrictions that Congress could impose on the President in the exercise of this taxing power.Similarly, in the instant case, the Constitution allocates to the President the exercise of the foreign borrowing power "subject to such limitations as may be provided under law."Following Southern Cross, but in line with the limitations as defined in Villena, the presidential prerogative may be exercised by the Presidents alter ego, who in this case is the Secretary ofFinance.It bears emphasis that apart from the Constitution, there is also a relevant statute, R.A. No. 245, that establishes the parameters by which the alter ego may act in behalf of the President withrespect to the borrowing power. This law expressly provides that the Secretary of Finance may enter into foreign borrowing contracts. This law neither amends nor goes contrary to theConstitution but merely implements the subject provision in a manner consistent with the structure of the Executive Department and the alter ego doctine. In this regard, respondents havedeclared that they have followed the restrictions provided under R.A. No. 245,63 which include the requisite presidential authorization and which, in the absence of proof and even allegation tothe contrary, should be regarded in a fashion congruent with the presumption of regularity bestowed on acts done by public officials.Moreover, in praying that the acts of the respondents, especially that of the Secretary of Finance, be nullified as being in violation of a restrictive constitutional interpretation, petitioners in effectwould have this Court declare R.A. No. 245 unconstitutional. We will not strikedown a law or provisions thereof without so much as a direct attack thereon when simple and logical statutory construction would suffice.Petitioners also submit that the unrestricted character of the Financing Program violates the framers intent behind Section 20, Article VII to restrict the power of the President. This intent,petitioners note, is embodied in the proviso in Sec. 20, Art. VII, which states that said power is "subject to such limitations as may be provided under law." However, as previously discussed,the debt-relief contracts are governed by the terms of R.A. No. 245, as amended by P.D. No. 142 s. 1973, and therefore were not developed in an unrestricted setting.Third Issue: Grave Abuse of Discretion andViolation of Constitutional PoliciesWe treat the remaining issues jointly, for in view of the foregoing determination, the general allegation of grave abuse of discretion on the part of respondents would arise from the purportedviolation of various state policies as expressed in the Constitution.Petitioners allege that the Financing Program violates the constitutional state policies to promote a social order that will "ensure the prosperity and independence of the nation" and free "thepeople from poverty,64 foster "social justice in all phases of national development," 65 and develop a self-reliant and independent national economy effectively controlled by Filipinos;" 66 thus, thecontracts executed or to be executed pursuant thereto were or would be tainted by a grave abuse of discretion amounting to lack or excess of jurisdiction.Respondents cite the following in support of the propriety of their acts: 67 (1) a Department of Finance study showing that as a result of the implementation of voluntary debt reductionsschemes, the countrys debt stock was reduced by U.S. $4.4 billion as of December 1991; 68 (2) revelations made by independent individuals made in a hearing before the Senate Committeeon Economic Affairs indicating that the assailed agreements would bring about substantial benefits to the country; 69 and (3) the Joint Legislative-Executive Foreign Debt Councils endorsementof the approval of the financing package containing the debtrelief agreements and issuance of a Motion to Urge the Philippine Debt Negotiating Panel to continue with the negotiation on the aforesaid package. 70Even with these justifications, respondents aver that their acts are within the arena of political questions which, based on the doctrine of separation of powers, 71 the judiciary must leave withoutinterference lest the courts substitute their judgment for that of the official concerned and decide a matter which by its nature or law is for the latter alone to decide. 72On the other hand, in furtherance of their argument on respondents violation of constitutional policies, petitioners cite an article of Jude Esguerra, The 1992 Buyback and SecuritizationAgreement with Philippine Commercial Bank Creditors,73 in illustrating a best-case scenario in entering the subject debt-relief agreements. The computation results in a yield of $218.99 million,ratherthan the $2,041.00 million claimed by the debt negotiators.74 On the other hand, the worst-case scenario allegedly is that a net amount of $1.638 million will flow out of the country as a result ofthe debt package.75Assuming the accuracy of the foregoing for the nonce, despite the watered-down parameters of petitioners computations, we can make no conclusion other than that respondents efforts weregeared towards debt-relief with marked positive results and towards achieving the constitutional policies which petitioners so hastily declare as having been violated by respondents. Werecognize that as with other schemes dependent on volatile market and economic structures, the contracts entered into by respondents may possibly have a net outflow and therefore negativeresult. However, even petitioners call this latter event the worst-case scenario. Plans are seldom foolproof. To ask the Court to strike down debt-relief contracts, which, according toindependent third party evaluations using historically-suggested rates would result in "substantial debt-relief," 76 based merely on the possibility of petitioners worst-case scenario projection,hardly seems reasonable.Moreover, the policies set by the Constitution as litanized by petitioners are not a panacea that can annul every governmental act sought to be struck down. The gist of petitioners argumentson violation of constitutional policies and grave abuse of discretion boils down to their allegation that the debt-relief agreements entered into by respondents do not deliver the kind of debt-

relief that petitioners would want. Petitioners cite the aforementioned article in stating that that "the agreement achieves little that cannot be gained through less complicated means likepostponing (rescheduling) principal payments,"77 thus:[T]he price of success in putting together this "debt-relief package" (indicates) the possibility that a simple rescheduling agreement may well turn out to be less expensive than thiscomprehensive "debt-relief" package. This means that in the next six years the humble and simple rescheduling process may well be the lesser evil because there is that distinct possibility thatless money will flow out of the country as a result.Note must be taken that from these citations, petitioners submit that there is possibly a better way to go about debt rescheduling and, on that basis, insist that the acts of respondents must bestruck down. These are rather tenuous grounds to condemn the subject agreements as violative of constitutional principles.ConclusionThe raison d etre of the Financing Program is to manage debts incurred by the Philippines in a manner that will lessen the burden on the Filipino taxpayersthus the term "debt-reliefagreements." The measures objected to by petitioners were not aimed at incurring more debts but at terminating pre-existing debts and were backed by the know-how of the countryseconomic managers as affirmed by third party empirical analysis.That the means employed to achieve the goal of debt-relief do not sit well with petitioners is beyond the power of this Court to remedy. The exercise of the power of judicial review is merely tochecknot supplantthe Executive, or to simply ascertain whether he has gone beyond the constitutional limits of his jurisdiction but not to exercise the power vested in him or to determine thewisdom of his act.78 In cases where the main purpose is to nullify governmental acts whether as unconstitutional or done with grave abuse of discretion, there is a strong presumption in favorof the validity of the assailed acts. The heavy onus is in on petitioners to overcome the presumption of regularity.We find that petitioners have not sufficiently established any basis for the Court to declare the acts of respondents as unconstitutional.WHEREFORE the petition is hereby DISMISSED. No costs.SO ORDERED.

G.R. No. 167919 February 14, 2007

PLARIDEL M. ABAYA, COMMODORE PLARIDEL C. GARCIA (retired) and PMA 59 FOUNDATION, INC., rep. by its President, COMMODORE CARLOS L. AGUSTIN(retired), Petitioners,vs.HON. SECRETARY HERMOGENES E. EBDANE, JR., in his capacity as Secretary of the DEPARTMENT OF PUBLIC WORKS and HIGHWAYS, HON. SECRETARY EMILIA T.BONCODIN, in her capacity as Secretary of the DEPARTMENT OF BUDGET and MANAGEMENT, HON. SECRETARY CESAR V. PURISIMA, in his capacity as Secretary of theDEPARTMENT OF FINANCE, HON. TREASURER NORMA L. LASALA, in her capacity as Treasurer of the Bureau of Treasury, and CHINA ROAD and BRIDGECORPORATION,Respondents.DECISIONCALLEJO, SR., J.:Before the Court is the petition for certiorari and prohibition under Rule 65 of the Rules of Court seeking to set aside and nullify Resolution No. PJHL-A-04-012 dated May 7, 2004 issued by theBids and Awards Committee (BAC) of the Department of Public Works and Highways (DPWH) and approved by then DPWH Acting Secretary Florante Soriquez. The assailed resolutionrecommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of civil works for Contract Package No. I (CP I), which consists of theimprovement/rehabilitation of the San Andres (Codon)-Virac-Jct. Bago-Viga road, with the length of 79.818 kilometers, in the island province of Catanduanes.The CP I project is one of the four packages comprising the project for the improvement/rehabilitation of the Catanduanes Circumferential Road, covering a total length of about 204.515kilometers, which is the main highway in Catanduanes Province. The road section (Catanduanes Circumferential Road) is part of the Arterial Road Links Development Project (Phase IV)funded under Loan Agreement No. PH-P204 dated December 28, 1999 between the Japan Bank for International Cooperation (JBIC) and the Government of the Republic of the Philippines.BackgroundBased on the Exchange of Notes dated December 27, 1999,1 the Government of Japan and the Government of the Philippines, through their respective representatives, namely, Mr. YoshihisaAra, Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of the Philippines, and then Secretary of Foreign Affairs Domingo L. Siazon, have reached an understandingconcerning Japanese loans to be extended to the Philippines. These loans were aimed at promoting our countrys economic stabilization and development efforts.The Exchange of Notes consisted of two documents: (1) a Letter from the Government of Japan, signed by Ambassador Ara, addressed to then Secretary of Foreign Affairs Siazon, confirmingthe understanding reached between the two governments concerning the loans to be extended by the Government of Japan to the Philippines; and (2) a document denominated as Records ofDiscussion where the salient terms of the loans as set forth by the Government of Japan, through the Japanese delegation, were reiterated and the said terms were accepted by the Philippinedelegation. Both Ambassador Ara and then Secretary Siazon signed the Records of Discussion as representatives of the Government of Japan and Philippine Government, respectively.The Exchange of Notes provided that the loans to be extended by the Government of Japan to the Philippines consisted of two loans: Loan I and Loan II. The Exchange of Notes stated in part:I1. A loan in Japanese yen up to the amount of seventy-nine billion eight hundred and sixty-one million yen (Y79,861,000,000) (hereinafter referred to as "the Loan I") will beextended, in accordance with the relevant laws and regulations of Japan, to the Government of the Republic of the Philippines (hereinafter referred to as "the Borrower I") by theJapan Bank for International Cooperation (hereinafter referred to as "the Bank") to implement the projects enumerated in the List A attached hereto (hereinafter referred to as "theList A") according to the allocation for each project as specified in the List A.2. (1) The Loan I will be made available by loan agreements to be concluded between the Borrower I and the Bank. The terms and conditions of the Loan I as well as theprocedure for its utilization will be governed by said loan agreements which will contain, inter alia, the following principles:...(2) Each of the loan agreements mentioned in sub-paragraph (1) above will be concluded after the Bank is satisfied of the feasibility, including environmentalconsideration, of the project to which such loan agreement relates.3. (1) The Loan I will be made available to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/or consultants of eligible source countriesunder such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the projects enumerated in the List A,provided that such purchases are made in such eligible source countries for products produced in and/or services supplied from those countries.(2) The scope of eligible source countries mentioned in sub-paragraph (1) above will be agreed upon between the authorities concerned of the two Governments.(3) A part of the Loan I may be used to cover eligible local currency requirements for the implementation of the projects enumerated in the List A.4. With regard to the shipping and marine insurance of the products purchased under the Loan I, the Government of the Republic of the Philippines will refrain from imposing anyrestrictions that may hinder fair and free competition among the shipping and marine insurance companies.x x x x2 1awphi1.netPertinently, List A, which specified the projects to be financed under the Loan I, includes the Arterial Road Links Development Project (Phase IV), to wit:LIST AMaximum amount in million yen)1. Secondary Education Development and Improvement Project 7,2102. Rural Water Supply Project (Phase V) 9513. Bohol Irrigation Project (Phase II) 6,0784. Agrarian Reform Infrastructure Support Project (Phase II) 16,9905. Arterial Road Links Development Project (Phase IV) 15,3846. Cordillera Road Improvement Project 5,8527. Philippines-Japan Friendship Highway Mindanao Section Rehabilitation Project (Phase II) 7,4348. Rehabilitation and Maintenance of Bridges Along Arterial Roads Project (Phase IV) 5,0689. Maritime Safety Improvement Project (Phase C) 4,71410. Pinatubo Hazard Urgent Mitigation Project (Phase II) 9,01311. Pasig-Marikina River Channel Improvement Project (Phase I) 1,167

Total 79,8613The Exchange of Notes further provided that:IIIxxxx3. The Government of the Republic of the Philippines will ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of paragraph4 of Part II are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where suchprocedures are inapplicable or inappropriate.x x x x4The Records of Discussion, which formed part of the Exchange of Notes, also stated in part, thus:xxxx1. With reference to sub-paragraph (3) of paragraph 3 of Part I of the Exchange of Notes concerning the financing of eligible local currency requirements for the implementation of the projectsmentioned in the said sub-paragraph, the representative of the Japanese delegation stated that:(1) such requirement of local currency as general administrative expenses, interest during construction, taxes and duties, expenses concerning office, remuneration to employeesof the executing agencies and housing, not directly related to the implementation of the said projects, as well as purchase of land properties, compensation and the like, however,will not be considered as eligible for financing under the Loan I; and(2) the procurement of products and/or services will be made in accordance with the procedures of international competitive tendering except where such procedures areinapplicable and inappropriate.x x x x5Thus, in accordance with the agreement reached by the Government of Japan and the Philippine Government, as expressed in the Exchange of Notes between the representatives of the twogovernments, the Philippines obtained from and was granted a loan by the JBIC. Loan Agreement No. PH-P204 dated December 28, 1999, in particular, stated as follows:Loan Agreement No. PH-P204, dated December 28, 1999, between JAPAN BANK FOR INTERNATIONAL COOPERATION and the GOVERNMENT OF THE REPUBLIC OF THEPHILIPPINES.In the light of the contents of the Exchange of Notes between the Government of Japan and the Government of the Republic of the Philippines dated December 27, 1999, concerningJapanese loans to be extended with a view to promoting the economic stabilization and development efforts of the Republic of the Philippines.JAPAN BANK FOR INTERNATIONAL COOPERATION (hereinafter referred to as "the BANK") and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter referred to as"the Borrower") herewith conclude the following Loan Agreement (hereinafter referred to as "the Loan Agreement", which includes all agreements supplemental hereto).x x x x6Under the terms and conditions of Loan Agreement No. PH-P204, JBIC agreed to lend the Philippine Government an amount not exceeding FIFTEEN BILLION THREE HUNDRED EIGHTYFOUR MILLION Japanese Yen (Y15,384,000,000) as principal for the implementation of the Arterial Road Links Development Project (Phase IV) on the terms and conditions set forth in theLoan Agreement and in accordance with the relevant laws and regulations of Japan. 7 The said amount shall be used for the purchase of eligible goods and services necessary for theimplementation of the above-mentioned project from suppliers, contractors or consultants. 8Further, it was provided under the said loan agreement that other terms and conditions generally applicable thereto shall be set forth in the General Terms and Conditions, dated November1987, issued by the Overseas Economic Cooperation Fund (OECF) and for the purpose, reference to "the OECF" and "Fund" therein (General Terms and Conditions) shall be substituted by"the JBIC" and "Bank," respectively. 9 Specifically, the guidelines for procurement of all goods and services to be financed out of the proceeds of the said loan shall be as stipulated in theGuidelines for Procurement under OECF Loans dated December 1997 (herein referred to as JBIC Procurement Guidelines). 10As mentioned earlier, the proceeds of Loan Agreement No. PH-P204 was to be used to finance the Arterial Road Links Development Project (Phase IV), of which the CatanduanesCircumferential Road was a part. This road section, in turn, was divided into four contract packages (CP):CP I: San Andres (Codon)-Virac-Jct. Bato- Viga Road - 79.818 kmsCP II: Viga-Bagamanoc Road - 10.40 kms.CP III: Bagamanoc-Pandan Road - 47.50 kms.CP IV: Pandan-Caramoran-Codon Road - 66.40 kms.11Subsequently, the DPWH, as the government agency tasked to implement the project, caused the publication of the "Invitation to Prequalify and to Bid" for the implementation of the CP Iproject in two leading national newspapers, namely, the Manila Times and Manila Standard on November 22 and 29, and December 5, 2002.A total of twenty-three (23) foreign and local contractors responded to the invitation by submitting their accomplished prequalification documents on January 23, 2003. In accordance with theestablished prequalification criteria, eight contractors were evaluated or considered eligible to bid as concurred by the JBIC. One of them, however, withdrew; thus, only seven contractorssubmitted their bid proposals.The bid documents submitted by the prequalified contractors/bidders were examined to determine their compliance with the requirements asstipulated in Article 6 of the Instruction to Bidders. 12 After the lapse of the deadline for the submission of bid proposals, the opening of the bids commenced immediately. Prior to the opening ofthe respective bid proposals, it was announced that the Approved Budget for the Contract (ABC) was in the amount of P738,710,563.67.The result of the bidding revealed the following three lowest bidders and their respective bids vis--vis the ABC: 13Name of Bidder

Original Bid As Read (Pesos)

As-Corrected Bid Amount (Pesos)

Variance

1) China Road And Bridge Corporation

P 993,183,904.98

P952,564,821.71

28.95%

2) Cavite Ideal Intl Const. Devt. Corp.

P1,099,926,598.11

P1,099,926,598.11

48.90%

3) Italian Thai Devt. Public Company, Ltd.

P1,125,022,075.34

P1,125,392,475.36

52.35%

The bid of private respondent China Road & Bridge Corporation was corrected from the original P993,183,904.98 (with variance of 34.45% from the ABC) to P952,564,821.71 (with variance of28.95% from the ABC) based on their letter clarification dated April 21, 2004. 14After further evaluation of the bids, particularly those of the lowest three bidders, Mr. Hedifume Ezawa, Project Manager of the Catanduanes Circumferential Road Improvement Project(CCRIP), in his Contractors Bid Evaluation Report dated April 2004, recommended the award of the contract to private respondent China Road & Bridge Corporation:In accordance with the Guidelines for the Procurements under ODA [Official Development Assistance] Loans, the Consultant hereby recommends the award of the contract for the constructionof CP I, San Andres (Codon) Virac Jct. Bato Viga Section under the Arterial Road Links Development Projects, Phase IV, JBIC Loan No. PH-P204 to the Lowest Complying Bidder, ChinaRoad and Bridge Corporation, at its total corrected bid amount of Nine Hundred Fifty-Two Million Five Hundred Sixty-Four Thousand Eight Hundred Twenty-One & 71/100 Pesos. 15The BAC of the DPWH, with the approval of then Acting Secretary Soriquez, issued the assailed Resolution No. PJHL-A-04-012 dated May 7, 2004 recommending the award in favor of privaterespondent China Road & Bridge Corporation of the contract for the implementation of civil works for CP I, San Andres (Codon) Virac Jct. Bato Viga Road (Catanduanes CircumferentialRoad Improvement Project) of the Arterial Roads Links Development Project, Phase IV, located in Catanduanes Province, under JBIC Loan Agreement No. PH-P204. 16 On September 29,2004, a Contract of Agreement was entered into by and between the DPWH and private respondent China Road & Bridge Corporation for the implementation of the CP I project.The PartiesPetitioner Plaridel M. Abaya claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen. Petitioner Plaridel C. Garcia likewise claims that he filed the suit as ataxpayer, former military officer, and a Filipino citizen. Petitioner PMA 59 Foundation, Inc., on the other hand, is a non-stock, non-profit corporation organized under the existing Philippinelaws. It claims that its members are all taxpayers and alumni of the Philippine Military Academy. It is represented by its President, Carlos L. Agustin.Named as public respondents are the DPWH, as the government agency tasked with the implementation of government infrastructure projects; the Department of Budget and Management(DBM) as the government agency that authorizes the release and disbursement of public funds for the implementation of government infrastructure projects; and the Department of Finance(DOF) as the government agency that acts as the custodian and manager of all financial resources of the government. Also named as individual public respondents are Hermogenes E.Ebdane, Jr., Emilia T. Boncodin and Cesar V. Purisima in their capacities as former Secretaries of the DPWH, DBM and DOF, respectively. On the other hand, public respondent Norma L.Lasala was impleaded in her capacity as Treasurer of the Bureau of Treasury.Private respondent China Road & Bridge Corporation is a duly organized corporation engaged in the business of construction.The Petitioners CaseThe petitioners mainly seek to nullify DPWH Resolution No. PJHL-A-04-012 dated May 7, 2004, which recommended the award to private respondent China Road & Bridge Corporation of thecontract for the implementation of the civil works of CP I. They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and private respondentChina Road & Bridge Corporation pursuant to the said resolution.They pose the following issues for the Courts resolution:I. Whether or not Petitioners have standing to file the instant Petition.II. Whether or not Petitioners are entitled to the issuance of a Writ of Certiorari reversing and setting aside DPWH Resolution No. PJHL-A-04-012, recommending the award of theContract Agreement for the implementation of civil works for CPI, San Andres (CODON)-VIRAC-JCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROADIMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, to China Road & BridgeCorporation.III. Whether or not the Contract Agreement executed by and between the Republic of the Philippines, through the Department of Public Works and Highways, and the China Road& Bridge Corporation, for the implementation of civil works for CPI, San Andres (CODON)-VIRAC-JCT BATO-VIGA ROAD (CATANDUANES CIRCUMFERENTIAL ROADIMPROVEMENT PROJECT) of the Arterial Road Links Development Project, Phase IV, located in Catanduanes Province, under JBIC L/A No. PH-P204, is void ab initio.IV. Whether or not Petitioners are entitled to the issuance of a Writ of Prohibition permanently prohibiting the implementation of DPWH Resolution No. PJHL-A-04-012 and theContract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the China Road & Bridge Corporation,and the disbursement of public funds by the [D]epartment of [B]udget and [M]anagement for such purpose.V. Whether or not Petitioners are entitled to a Preliminary Injunction and/or a Temporary Restraining Order immediately enjoining the implementation of DPWH Resolution No.PJHL-A-04-012 and the Contract Agreement executed by and between the Republic of the Philippines (through the Department of Public Works and Highways) and the ChinaRoad & Bridge Corporation, and the disbursement of public funds by the Department of Budget and Management for such purpose, during the pendency of this case. 17Preliminarily, the petitioners assert that they have standing or locus standi to file the instant petition. They claim that as taxpayers and concerned citizens, they have the right and duty toquestion the expenditure of public funds on illegal acts. They point out that the Philippine Government allocates a peso-counterpart for CP I, which amount is appropriated by Congress in theGeneral Appropriations Act; hence, funds that are being utilized in the implementation of the questioned project also partake of taxpayers money. The present action, as a taxpayers suit, isthus allegedly proper.They likewise characterize the instant petition as one of transcendental importance that warrants the Courts adoption of a liberal stance on the issue of standing. It cited several cases wherethe Court brushed aside procedural technicalities in order to resolve issues involving paramount public interest and transcendental importance. 18 Further, petitioner Abaya asserts that hepossesses the requisite standing as a former member of the House of Representatives and one of the principal authors of Republic Act No. 9184 (RA 9184) 19 known as the GovernmentProcurement Reform Act, the law allegedly violated by the public respondents.On the substantive issues, the petitioners anchor the instant petition on the contention that the award of the contract to private respondent China Road & Bridge Corporation violates RA 9184,particularly Section 31 thereof which reads:SEC. 31. Ceiling for Bid Prices. The ABC shall be the upper limit or ceiling for the Bid prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating in thebidding. There shall be no lower limit to the amount of the award.In relation thereto, the petitioners cite the definition of the ABC, thus:SEC. 5. Definition of Terms. xxx(a) Approved Budget for the Contract (ABC). refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act and/orcontinuing appropriations, in the case of National Government Agencies; the Corporate Budget for the contract approved by the governing Boards, pursuant to E.O. No. 518, series of 1979, inthe case of Government-Owned and/or Controlled Corporations, Government Financial Institutions and State Universities and Colleges; and the Budget for the contract approved by therespective Sanggunian, in the case of Local Government Units.xxxThe petitioners theorize that the foregoing provisions show the mandatory character of ceilings or upper limits of every bid. Under the above-quoted provisions of RA 9184, all bids or awardsshould not exceed the ceilings or upper limits; otherwise, the contract is deemed void and inexistent.

Resolution No. PJHL-A-04-012 was allegedly issued with grave abuse of discretion because it recommended the award of the contract to private respondent China Road & Bridge Corporationwhose bid was more than P200 million overpriced based on the ABC. As such, the award is allegedly illegal and unconscionable.In this connection, the petitioners opine that the contract subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation is void ab initio forbeing prohibited by RA 9184. They stress that Section 31 thereof expressly provides that "bid prices that exceed this ceiling shall be disqualified outright from participating in the bidding." Theupper limit or ceiling is called the ABC and since the bid of private respondent China Road & Bridge Corporation exceeded the ABC for the CP I project, it should have been allegedlydisqualified from the bidding process and should not, by law, have been awarded the said contract. They invoke Article 1409 of the Civil Code:ART. 1409. The following contracts are inexistent and void from the beginning:(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;(2) Those which are absolutely simulated or fictitious;(3) Those whose cause or object did not exist at the time of the transaction;(4) Those whose object is outside the commerce of men;(5) Those which contemplate an impossible service;(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;(7) Those expressly prohibited or declared void by law.For violating the above provision, the contract between the DPWH and private respondent China Road & Bridge Corporation is allegedly inexistent and void ab initio and can produce noeffects whatsoever.It is the contention of the petitioners that RA 9184 is applicable to both local- and foreign-funded procurement contracts. They cite the following excerpt of the deliberations of the BicameralConference Committee on the Disagreeing Provisions of Senate Bill No. 2248 and House Bill No. 4809: 20REP. ABAYA. Mr. Chairman, can we just propose additional amendments? Can we go back to Section 4, Mr. Chairman?THE CHAIRMAN (SEN. ANGARA). Section? Section ano, Del, 4? Definition definition of terms.REP. ABAYA. Sa House bill, it is sa scope and application.THE CHAIRMAN (SEN. ANGARA). Okay.REP. ABAYA. It should read as follows: "This Act shall apply to the procurement of goods, supplies and materials, infrastructure projects and consulting services regardless of funding sourcewhether local or foreign by the government."THE CHAIRMAN (SEN. ANGARA). Okay, accepted. We accept. The Senate accepts it.21xxx xxx xxxTHE CHAIRMAN (SEN ANGARA). Just take note of that ano. Medyo nga problematic yan eh. Now, just for the record Del, can you repeat again the justification for including foreign fundedcontracts within the scope para malinaw because the World Bank daw might raise some objection to it.REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these are the big projects. To give an example, if you allow bids above government estimate, lets say take thecase of 500 million project, included in that 500 million is the 20 percent profit. If you allow them to bid above government estimate, they will add another say 28 percent of (sic) 30 percent, 30percent of 500 million is another 150 million. Ito, this is a rich source of graft money, aregluhan na lang, 150 million, five contractors will gather, "O eto 20 million, 20 million, 20 million." So, it isrigged. Yun ang practice na nangyayari. If we eliminate that, if we have a ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang contractor. So thispromote (sic) collusion among bidders, of course, with the cooperation of irresponsible officials of some agencies. So we should have a ceiling to include foreign funded projects. 22The petitioners insist that Loan Agreement No. PH-P204 between the JBIC and the Philippine Government is neither a treaty, an international nor an executive agreement that would bar theapplication of RA 9184. They point out that to be considered a treaty, an international or an executive agreement, the parties must be two sovereigns or States whereas in the case of LoanAgreement No. PH-P204, the parties are the Philippine Government and the JBIC, a banking agency of Japan, which has a separate juridical personality from the Japanese Government.They further insist on the applicability of RA 9184 contending that while it took effect on January 26, 2003 23 and Loan Agreement No. PH-P204 was executed prior thereto or on December 28,1999, the actual procurement or award of the contract to private respondent China Road & Bridge Corporation was done after the effectivity of RA 9184. The said law is allegedly specific as toits application, which is on the actual procurement of infrastructure and other projects only, and not on the loan agreements attached to such projects. Thus, the petition only prays for theannulment of Resolution No. PJHL-A-04-012 as well as the contract between the DPWH and private respondent China Road & Bridge Corporation. The petitioners clarify that they do not prayfor the annulment of Loan Agreement No. PH-P204. Since the subject procurement and award of the contract were done after the effectivity of RA 9184, necessarily, the procurement rulesestablished by that law allegedly apply, and not Presidential Decree No. 1594 (PD 1594) 24 and Executive Order No. 40 (EO 40), series of 2001, 25 as contended by the respondents. The latterlaws, including their implementing rules, have allegedly been repealed by RA 9184. Even RA 4860, as amended, known as the Foreign Borrowings Act, the petitioners posit, may have alsobeen repealed or modified by RA 9184 insofar as its provisions are inconsistent with the latter.The petitioners also argue that the "Implementing Rules and Regulations (IRR) of RA 9184, Otherwise Known as the Government Procurement Reform Act, Part A" (IRR-A) cited by therespondents is not applicable as these rules only govern domestically-funded procurement contracts. They aver that the implementing rules to govern foreign-funded procurement, as in thepresent case, have yet to be drafted and in fact, there are concurrent resolutions drafted by both houses of Congress for the Reconvening of the Joint Congressional Oversight Committee forthe formulation of the IRR for foreign-funded procurements under RA 9184.The petitioners maintain that disbursement of public funds to implement a patently void and illegal contract is itself illegal and must be enjoined. They bring to the Courts attention the fact thatthe works on the CP I project have already commenced as early as October 2004. They thus urge the Court to issue a writ of certiorari to set aside Resolution No. PJHL-A-04-012 as well as todeclare null and void the contract entered into between the DPWH and private respondent China Road & Bridge Corporation. They also pray for the issuance of a temporary restraining orderand, eventually, a writ of prohibition to permanently enjoin the DPWH from implementing Resolution No. PJHL-A-04-012 and its contract with private respondent China Road & BridgeCorporation as well as the DBM from disbursing funds for the said purpose.The Respondents Counter-ArgumentsThe public respondents, namely the DPWH, DBM and DOF, and their respective named officials, through the Office of the Solicitor General, urge the Court to dismiss the petition on groundsthat the petitioners have no locus standi and, in any case, Resolution No. PJHL-A-04-012 and the contract between the DPWH and private respondent China Road & Bridge Corp. are valid.According to the public respondents, a taxpayers locus standi was recognized in the following cases: (a) where a tax measure is assailed as unconstitutional; 26 (b) where there is a question ofvalidity of election laws;27 (c) where legislators questioned the validity of any official action upon the claim that it infringes on their prerogatives as legislators; 28 (d) where there is a claim ofillegal disbursement or wastage of public funds through the enforcement of an invalid or unconstitutional law; 29 (e) where it involves the right of members of the Senate or House ofRepresentatives to question the validity of a presidential veto or condition imposed on an item in an appropriation bill; 30 or (f) where it involves an invalid law, which when enforced will put thepetitioner in imminent danger of sustaining some direct injury as a result thereof, or that he has been or is about to be denied some right or privilege to which he is lawfully entitled or that he isabout to be subjected to some burdens or penalties by reason of the statute complained of. 31 None of the above considerations allegedly obtains in the present case.It is also the view of the public respondents that the fact that petitioner Abaya was a former lawmaker would not suffice to confer locus standi on himself. Members of Congress may properlychallenge the validity of an official act of any department of the government only upon showing that the assailed official act affects or impairs their rights and prerogatives as legislators.

The public respondents further assail the standing of the petitioners to file the instant suit claiming that they failed to allege any specific injury suffered nor an interest that is direct and personalto them. If at all, the interest or injuries claimed by the petitioners are allegedly merely of a general interest common to all members of the public. Their interest is allegedly too vague, highlyspeculative and uncertain to satisfy the requirements of locus standi.The public respondents find it noteworthy that the petitioners do not raise issues of constitutionality but only of contract law, which the petitioners not being privies to the agreement cannotraise. This is following the principle that a stranger to a contract cannot sue either or both the contracting parties to annul and set aside the same except when he is prejudiced on his rightsand can show detriment which would positively result to him from the implementation of the contract in which he has no intervention. There being no particularized interest or elementalsubstantial injury necessary to confer locus standi, the public respondents implore the Court to dismiss the petition.On the merits, the public respondents maintain that the imposition of ceilings or upper limits on bid prices in RA 9184 does not apply because the CP I project and the entire CatanduanesCircumferential Road Improvement Project, financed by Loan Agreement No. PH-P204 executed between the Philippine Government and the JBIC, is governed by the latters ProcurementGuidelines which precludes the imposition of ceilings on bid prices. Section 5.06 of the JBIC Procurement Guidelines reads:Section 5.06. Evaluation and Comparison of Bids.xxx(e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted.It was explained that other foreign banks such as the Asian Development Bank (ADB) and the World Bank (WB) similarly prohibit the bracketing or imposition of a ceiling on bid prices.The public respondents stress that it was pursuant to Loan Agreement No. PH-P204 that the assailed Resolution No. PJHL-A-04-012 and the subsequent contract between the DPWH andprivate respondent China Road & Bridge Corporation materialized. They likewise aver that Loan Agreement No. PH-P204 is governed by RA 4860, as amended, or the Foreign Borrowings Act.Section 4 thereof states:SEC. 4. In the contracting of any loan, credit or indebtedness under this Act, the President of the Philippines may, when necessary, agree to waive or modify, the application of any law grantingpreferences or imposing restrictions on international competitive bidding, including among others [Act No. 4239, Commonwealth Act No. 138], the provisions of [CA 541], insofar as suchprovisions do not pertain to constructions primarily for national defense or security purposes, [RA 5183]; Provided, however, That as far as practicable, utilization of the services of qualifieddomestic firms in the prosecution of projects financed under this Act shall be encouraged: Provided, further, That in case where international competitive bidding shall be conducted preferenceof at least fifteen per centum shall be granted in favor of articles, materials or supplies of the growth, production or manufacture of the Philippines: Provided, finally, That the method andprocedure in comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution.DOJ Opinion No. 46, Series of 1987, is relied upon by the public respondents as it opined that an agreement for the exclusion of foreign assisted projects from the coverage of local biddingregulations does not contravene existing legislations because the statutory basis for foreign loan agreements is RA 4860, as amended, and under Section 4 thereof, the President isempowered to waive the application of any law imposing restrictions on the procurement of goods and services pursuant to such loans.Memorandum Circular Nos. 104 and 108, issued by the President, to clarify RA 4860, as amended, and PD 1594, relative to the award of foreign-assisted projects, are also invoked by thepublic respondents, to wit:Memorandum Circular No. 104:In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise known as the "Foreign Borrowings Act"xxxIt is hereby clarified that foreign-assisted infrastructure projects may be exempted from the application for the pertinent provisions of the Implementing Rules and Regulations (IRR) ofPresidential Decree (P.D.) No. 1594 relative to the method and procedure in the comparison of bids, which matter may be the subject of agreement between the infrastructure agencyconcerned and the lending institution. It should be made clear however that public bidding is still required and can only be waived pursuant to existing laws.Memorandum Circular No. 108:In view of the provisions of Section 4 of Republic Act No. 4860, as amended, otherwise known as the "Foreign Borrowings Act", it is hereby clarified that, for projects supported in whole or inpart by foreign assistance awarded through international or local competitive bidding, the government agency concerned may award the contract to the lowest evaluated bidder at his bid priceconsistent with the provisions of the applicable loan/grant agreement.Specifically, when the loan/grant agreement so stipulates, the government agency concerned may award the contract to the lowest bidder even if his/its bid exceeds the approved agencyestimate.It is understood that the concerned government agency shall, as far as practicable, adhere closely to the implementing rules and regulations of Presidential Decree No. 1594 during loan/grantnegotiation and the implementation of the projects.32The public respondents characterize foreign loan agreements, including Loan Agreement No. PH-P204, as executive agreements and, as such, should be observed pursuant to thefundamental principle in international law of pacta sunt servanda.33 They cite Section 20 of Article VII of the Constitution as giving the President the authority to contract foreign loans:SEC. 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitationsas may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decisions onapplications for loans to be contracted or guaranteed by the Government or Government-owned and Controlled Corporations which would have the effect of increasing the foreign debt, andcontaining other matters as may be provided by law.The Constitution, the public respondents emphasize, recognizes the enforceability of executive agreements in the same way that it recognizes generally accepted principles of international lawas forming part of the law of the land. 34 This recognition allegedly buttresses the binding effect of executive agreements to which the Philippine Government is a signatory. It is pointed out bythe public respondents that executive agreements are essentially contracts governing the rights and obligations of the parties. A contract, being the law between the parties, must be faithfullyadhered to by them. Guided by the fundamental rule of pacta sunt servanda, the Philippine Government bound itself to perform in good faith its duties and obligations under Loan AgreementNo. PH-P204.The public respondents further argue against the applicability of RA 9184 stating that it was signed into law on January 10, 2003. 35 On the other hand, Loan Agreement No. PH-P204 wasexecuted on December 28, 1999, where the laws then in force on government procurements were PD 1594 and EO 40. The latter law (EO 40), in particular, excluded from its application "anyexisting and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financing institutions as well as frombilateral and other similar foreign sources."The applicability of EO 40, not RA 9184, is allegedly bolstered by the fact that the "Invitation to Prequalify and to Bid" for the implementation of the CP I project was published in two leadingnational newspapers, namely, the Manila Times and Manila Standard on November 22, 29 and December 5, 2002, or before the signing into law of RA 9184 on January 10, 2003. In thisconnection, the public respondents point to Section 77 of IRR-A, which reads:SEC. 77. Transitory Clause. In all procurement activities, if the advertisement or invitation for bids was issued prior to the effectivity of the Act, the provisions of EO 40 and its IRR, PD 1594 and its IRR, RA 7160 and itsIRR, or other applicable laws as the case may be, shall govern.

In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting theprocurement procedures, rules and regulations provided in EO 40 and its IRR, or other applicable laws, as the case may be.Section 4 of RA 9184 is also invoked by the public respondents as it provides:SEC. 4. Scope & Applications. This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, byall branches and instrumentalities of govt, its departments, offices and agencies, including government-owned and/or controlled corporations and local government units, subject to theprovisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall beobserved.It is also the position of the public respondents that even granting arguendo that Loan Agreement No. PH-P204 were an ordinary loan contract, still, RA 9184 is inapplicable under the nonimpairment clause36 of the Constitution. The said loan agreement expressly provided that the procurement of goods and services for the project financed by the same shall be governed by theGuidelines for Procurement under OECF Loans dated December 1997. Further, Section 5.06 of the JBIC Procurement Guidelines categorically provides that "[a]ny procedure under which bidsabove or below a predetermined bid value assessment are automatically disqualified is not permitted."The public respondents explain that since the contract is the law between the parties and Loan Agreement No. PH-P204 states that the JBIC Procurement Guidelines shall govern the partiesrelationship and further dictates that there be no ceiling price for the bidding, it naturally follows that any subsequent law passed contrary to the letters of the said contract would have no effectwith respect to the parties rights and obligations arising therefrom.To insist on the application of RA 9184 on the bidding for the CP I project would, notwithstanding the terms and conditions of Loan Agreement No. PH-P204, allegedly violate the constitutionalprovision on non-impairment of obligations and contracts, and destroy vested rights duly acquired under the said loan agreement.Lastly, the public respondents deny that there was illegal disbursement of public funds by the DBM. They asseverate that all the releases made by the DBM for the implementation of the entireArterial Road Links Project Phase IV, which includes the Catanduanes Circumferential Road Improvement Project, were covered by the necessary appropriations made by law, specificallythe General Appropriations Act (GAA). Further, the requirements and procedures prescribed for the release of the said funds were duly complied with.For its part, private respondent China Road & Bridge Corporation similarly assails the standing of the petitioners, either as taxpayers or, in the case of petitioner Abaya, as a former lawmaker,to file the present suit. In addition, it is also alleged that, by filing the petition directly to this Court, the petitioners failed to observe the hierarchy of courts.On the merits, private respondent China Road & Bridge Corporation asserts that the applicable law to govern the bidding of the CP I project was EO 40, not RA 9184, because the former wasthe law governing the procurement of government projects at the time that it was bidded out. EO 40 was issued by the Office of the President on Oct. 8, 2001 & Section 1 thereof states that:SEC. 1. Scope and Application. This Executive Order shall apply to the procurement of: (a) goods, supplies, materials and related services; (b) civil works; and (c) consulting services, by allNational Government agencies, including State Universities and Colleges (SUCs), Government-Owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs),hereby referred to as the Agencies. This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of contract.xxxThe Invitation to Prequalify and to Bid was first published on November 22, 2002. On the other hand, RA 9184 was signed into law only on January 10, 2003. Since the law in effect at the timethe procurement process was initiated was EO 40, private respondent China Road & Bridge Corporation submits that it should be the said law which should govern the entire procurementprocess relative to the CP I project.EO 40 expressly recognizes as an exception from the application of the provisions thereof on approved budget ceilings, those projects financed by international financing institutions (IFIs) andforeign bilateral sources. Section 1 thereof, quoted in part earlier, further states:SEC. 1. Scope and Application. x x xNothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from internationalfinancing institutions as well as from bilateral and other similar foreign sources.Section 1.2 of the Implementing Rules and Regulations of EO 40 is likewise invoked as it provides:For procurement financed wholly or partly from Official Development Assistance (ODA) funds from International Financing Institutions (IFIs), as well as from bilateral and other similar foreignsources, the corresponding loan/grant agreement governing said funds as negotiated and agreed upon by and between the Government and the concerned IFI shall be observed.Private respondent China Road & Bridge Corporation thus postulates that following EO 40, the procurement of goods and services for the CP I project should be governed by the terms andconditions of Loan Agreement No. PH-P204 entered into between the JBIC and the Philippine Government. Pertinently, Section 5.06 of the JBIC Procurement Guidelines prohibits the settingof ceilings on bid prices.Private respondent China Road & Bridge Corporation claims that when it submitted its bid for the CP I project, it relied in good faith on the provisions of EO 40. It was allegedly on the basis ofthe said law that the DPWH awarded the project to private respondent China Road & Bridge Coporation even if its bid was higher than the ABC. Under the circumstances, RA 9184 could notbe applied retroactively for to do so would allegedly impair the vested rights of private respondent China Road & Bridge Corporation arising from its contract with the DPWH.It is also contended by private respondent China Road & Bridge Corporation that even assuming arguendo that RA 9184 could be applied retroactively, it is still the terms of Loan AgreementNo. PH-P204 which should govern the procurement of goods and services for the CP I project. It supports its theory by characterizing the said loan agreement, executed pursuant to theExchange of Notes between the Government of Japan and the Philippine Government, as an executive agreement.Private respondent China Road & Bridge Corporation, like the public respondents, cites RA 4860 as the basis for the Exchange of Notes and Loan Agreement No. PH-P204. As aninternational or executive agreement, the Exchange of Notes and Loan Agreement No. PH-P204 allegedly created a legally binding obligation on the parties.The following excerpt of the deliberations of the Bicameral Conference Committee on the Disagreeing Provision of Senate Bill No. 2248 and House Bill No. 4809 is cited by private respondentChina Road & Bridge Corporation to support its contention that it is the intent of the lawmakers to exclude from the application of RA 9184 those foreign-funded projects:xxxREP. MARCOS. Yes, Mr. Chairman, to respond and to put into the record, a justification for the inclusion of foreign contracts, may we just state that foreign contracts have, of course, beenbrought into the ambit of the law because of the Filipino counterpart for this foreign projects, they are no longer strictly foreign in nature but fall under the laws of the Philippine government.THE CHAIRMAN (SEN. ANGARA). Okay. I think thats pretty clear. I think the possible concern is that some ODA are with strings attached especially the Japanese. The Japanese are quitestrict about that, that they are (sic) even provide the architect and the design, etcetera, plus, of course, the goods that will be supplied.Now, I think weve already provided that this is open to all and we will recognize our international agreements so that this bill will not also restrict the flow of foreign funding, because somecountries now make it a condition that they supply both services and goods especially the Japanese.So I think we can put a sentence that we continue to honor our international obligations, di ba Laura?MR. ENCARNACION. Actually, subject to any treaty.THE CHAIRMAN (SEN. ANGARA). Yun pala eh. That should allay their anxiety and concern. Okay, buti na lang for the record para malaman nila na we are conscious sa ODA. 37

Private respondent China Road & Bridge Corporation submits that based on the provisions of the Exchange of Notes and Loan Agreement No. PH-P204, it was rightfully and legally awardedthe CP I project. It urges the Court to dismiss the petition for lack of merit.The Courts RulingsPetitioners, as taxpayers, possess locus standi to file the present suitBriefly stated, locus standi is "a right of appearance in a court of justice on a given question." 38 More particularly, it is a partys personal and substantial interest in a case such that he hassustained or will sustain direct injury as a result of the governmental act being challenged. It calls for more than just a generalized grievance. The term "interest" means a material interest, aninterest in issue affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. 39 Standing or locus standi is a peculiar concept inconstitutional law40 and the rationale for requiring a party who challenges the constitutionality of a statute to allege such a personal stake in the outcome of the controversy is "to assure thatconcrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." 41Locus standi, however, is merely a matter of procedure42 and it has been recognized that in some cases, suits are not brought by parties who have been personally injured by the operation ofa law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest. 43 Consequently, the Court, in a catena of cases, 44 has invariablyadopted a liberal stance on locus standi, including those cases involving taxpayers.The prevailing doctrine in taxpayers suits is to allow taxpayers to question contracts entered into by the national government or government- owned or controlled corporations allegedly incontravention of law.45 A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that thereis a wastage of public funds through the enforcement of an invalid or unconstitutional law.46 Significantly, a taxpayer need not be a party to the contract to challenge its validity. 47In the present case, the petitioners are suing as taxpayers. They have sufficiently demonstrated that, notwithstanding the fact that the CP I project is primarily financed from loans obtained bythe government from the JBIC, nonetheless, taxpayers money would be or is being spent on the project considering that the Philippine Govt is required to allocate a peso-counterpart therefor.The public respondents themselves admit that appropriations for these foreign-assisted projects in the GAA are composed of the loan proceeds and the peso-counterpart. The counterpartfunds, the Solicitor General explains, refer to the component of the project cost to be financed from government-appropriated funds, as part of the governments commitment in theimplementation of the project.48 Hence, the petitioners correctly asserted their standing since a part of the funds being utilized in the implementation of the CP I project partakes of taxpayersmoney.Further, the serious legal questions raised by the petitioners, e.g., whether RA 9184 applies to the CP I project, in particular, and to foreign-funded government projects, in general, and the factthat public interest is indubitably involved considering the public expenditure of millions of pesos, warrant the Court to adopt in the present case its liberal policy on locus standi.In any case, for reasons which will be discussed shortly, the substantive arguments raised by the petitioners fail to persuade the Court as it holds that Resolution No. PJHL-A-04-012 is valid.As a corollary, the subsequent contract entered into by and between the DPWH and private respondent China Road & Bridge Corporation is likewise valid.History of Philippine Procurement LawsIt is necessary, at this point, to give a brief history of Philippine laws pertaining to procurement through public bidding. The United States Philippine Commission introduced the Americanpractice of public bidding through Act No. 22, enacted on October 15, 1900, by requiring the Chief Engineer, United States Army for the Division of the Philippine Islands, acting as purchasingagent under the control of the then Military Governor, to advertise and call for a competitive bidding for the purchase of the necessary materials and lands to be used for the construction ofhighways and bridges in the Philippine Islands. 49 Act No. 74, enacted on January 21, 1901 by the Philippine Commission, required the General Superintendent of Public Instruction to purchaseoffice supplies through competitive public bidding. 50 Act No. 82, approved on January 31, 1901, and Act No. 83, approved on February 6, 1901, required the municipal and provincialgovernments, respectively, to hold competitive public biddings in the making of contracts for public works and the purchase of office supplies. 51On June 21, 1901, the Philippine Commission, through Act No. 146, created the Bureau of Supply and with its creation, public bidding became a popular policy in the purchase of supplies,materials and equipment for the use of the national government, its subdivisions and instrumentalities. 52 On February 3, 1936, then President Manuel L. Quezon issued Executive Order No. 16declaring as a matter of general policy that government contracts for public service or for furnishing supplies, materials and equipment to the government should be subjected to publicbidding.53 The requirement of public bidding was likewise imposed for public works of construction or repair pursuant to the Revised Administrative Code of 1917.Then President Diosdado Macapagal, in Executive Order No. 40 dated June 1, 1963, reiterated the directive that no government contract for public service or for furnishing supplies, materialsand equipment to the government or any of its branches, agencies or instrumentalities, should be entered into without public bidding except for very extraordinary reasons to be determined bya Committee constituted thereunder. Then President Ferdinand Marcos issued PD 1594 prescribing guidelines for government infrastructure projects and Section 4 54 thereof stated that theyshould generally be undertaken by contract after competitive public bidding.Then President Corazon Aquino issued Executive Order No. 301 (1987) prescribing guidelines for government negotiated contracts. Pertinently, Section 62 of the Administrative Code of 1987reiterated the requirement of competitive public bidding in government projects. In 1990, Congress passed RA 6957, 55 which authorized the financing, construction, operation and maintenanceof infrastructure by the private sector. RA 7160 was likewise enacted by Congress in 1991 and it contains provisions governing the procurement of goods and locally-funded civil works by thelocal government units.Then President Fidel Ramos issued Executive Order No. 302 (1996), providing guidelines for the procurement of goods and supplies by the national government. Then President JosephEjercito Estrada issued Executive Order No. 201 (2000), providing additional guidelines in the procurement of goods and supplies by the national government. Thereafter, he issued ExecutiveOrder No. 262 (2000) amending EO 302 (1996) and EO 201 (2000).On October 8, 2001, President Gloria Macapagal-Arroyo issued EO 40, the law mainly relied upon by the respondents, entitled Consolidating Procurement Rules and Procedures for AllNational Government Agencies, Government-Owned or Controlled Corporations and Government Financial Institutions, and Requiring the Use of the Government Procurement System. Itaccordingly repealed, amended or modified all executive issuances, orders, rules and regulations or parts thereof inconsistent therewith. 56On January 10, 2003, President Arroyo signed into law RA 9184. It took effect on January 26, 2004, or fifteen days after its publication in two newspapers of general circulation. 57 It expresslyrepealed, among others, EO 40, EO 262 (2000), EO 302(1996) and PD 1594, as amended:SEC. 76. Repealing Clause. This law repeals Executive Order No. 40, series of 2001, entitled "Consolidating Procurement Rules and Procedures for All National Government Agencies,Government Owned or Controlled Corporations and/or Government Financial Institutions, and Requiring the Use of the Government Electronic Procurement System"; Executive Order No.262, series of 1996, entitled "Amending Executive Order No. 302, series of 1996, entitled Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by theNational Government" and Section 3 of Executive Order No. 201, series of 2000, entitled "Providing Additional Policies and Guidelines in the Procurement of Goods/Supplies by the NationalGovernment"; Executive Order No. 302, series of 1996, entitled "Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government"and Presidential Decree No. 1594 dated June 11, 1978, entitled "Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure Contracts." This law amends Title Six,Book Two of Republic Act No. 7160, otherwise known as the "Local Government Code of 1991"; the relevant provisions of Executive Order No. 164, series of 1987, entitled "ProvidingAdditional Guidelines in the Processing and Approval of Contracts of the National Government"; and the relevant provisions of Republic Act No. 7898 dated February 23, 1995, entitled "An ActProviding for the Modernization of the Armed Forces of the Philippines and for Other Purposes." Any other law, presidential decree or issuance, executive order, letter of instruction,administrative order, proclamation, charter, rule or regulation and/or parts thereof contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.In addition to these laws, RA 4860, as amended, must be mentioned as Section 4 thereof provides that "[i]n the contracting of any loan, credit or indebtedness under this Act, the President ofthe Philippines may, when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x Provided,finally, That the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution."EO 40, not RA 9184, is applicable to the procurement

process undertaken for the CP I project. RA 9184

cannot be given retroactive application.It is not disputed that with respect to the CP I project, the Invitation to Prequalify and to Bid for its implementation was published in two leading national newspapers, namely, the Manila Timesand Manila Standard on November 22, 29 and December 5, 2002. At the time, the law in effect was EO 40. On the other hand, RA 9184 took effect two months later or on January 26, 2003.Further, its full implementation was even delayed as IRR-A was only approved by President Arroyo on September 18, 2003 and subsequently published on September 23, 2003 in the ManilaTimes and Malaya newspapers.58The provisions of EO 40 apply to the procurement process pertaining to the CP I project as it is explicitly provided in Section 1 thereof that:SEC. 1. Scope and Application. This Executive Order shall apply to see procurement of (a) goods, supplies, materials and related service; (b) civil works; and (c) consulting services, by allNational Government agencies, including State Universities and Colleges (SUCs), Government-Owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs),hereby referred to as "Agencies." This Executive Order shall cover the procurement process from the pre-procurement conference up to the award of the contract.Nothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from internationalfinancing institutions as well as from bilateral and similar foreign sources.The procurement process basically involves the following steps: (1) pre-procurement conference; (2) advertisement of the invitation to bid; (3) pre-bid conference; (4) eligibility check ofprospective bidders; (5) submission and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening and examination; (8) bid evaluation; (9) post qualification; (10) award of contractand notice to proceed.59 Clearly then, when the Invitation to Prequalify and to Bid for the implementation of the CP I project was published on November 22, 29 and December 5, 2002, theprocurement process thereof had already commenced and the application of EO 40 to the procurement process for the CP I project had already attached.RA 9184 cannot be applied retroactively to govern the procurement process relative to the CP I project because it is well settled that a law or regulation has no retroactive application unless itexpressly provides for retroactivity.60Indeed, Article 4 of the Civil Code is clear on the matter: "[l]aws shall have no retroactive effect, unless the contrary is provided." In the absence of suchcategorical provision, RA 9184 will not be applied retroactively to the CP I project whose procurement process commenced even before the said law took effect.That the legislators did not intend RA 9184 to have retroactive effect could be gleaned from the IRR-A formulated by the Joint Congressional Oversight Committee (composed of the Chairmanof the Senate Committee on Constitutional Amendments and Revision of Laws, and two members thereof appointed by the Senate President and the Chairman of the House Committee onAppropriations, and two members thereof appointed by the Speaker of the House of Representatives) and the Govt Procurement Policy Board (GPPB). Section 77 of the IRR-A states, thus:SEC. 77. Transitory ClauseIn all procurement activities, if the advertisement or invitation for bids was issued prior to the effectivity of the Act, the provisions of E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and itsIRR, or other applicable laws, as the case may be, shall govern.In cases where the advertisements or invitations for bids were issued after the effectivity of the Act but before the effectivity of this IRR-A, procuring entities may continue adopting theprocurement procedures, rules and regulations provided in E.O. 40 and its IRR, P.D. 1594 and its IRR, R.A. 7160 and its IRR, or other applicable laws, as the case may be.In other words, under IRR-A, if the advertisement of the invitation for bids was issued prior to the effectivity of RA 9184, such as in the case of the CP I project, the provisions of EO 40 and itsIRR, and PD 1594 and its IRR in the case of national government agencies, and RA 7160 and its IRR in the case of local government units, shall govern.Admittedly, IRR-A covers only fully domestically-funded procurement activities from procurement planning up to contract implementation and that it is expressly stated that IRR-B for foreignfunded procurement activities shall be subject of a subsequent issuance. 61 Nonetheless, there is no reason why the policy behind Section 77 of IRR-A cannot be applied to foreign-fundedprocurement projects like the CP I project. Stated differently, the policy on the prospective or non-retroactive application of RA 9184 with respect to domestically-funded procurement projectscannot be any different with respect to foreign-funded procurement projects like the CP I project. It would be incongruous, even absurd, to provide for the prospective application of RA 9184with respect to domestically-funded procurement projects and, on the other hand, as urged by the petitioners, apply RA 9184 retroactively with respect to foreign- funded procurement projects.To be sure, the lawmakers could not have intended such an absurdity.Thus, in the light of Section 1 of EO 40, Section 77 of IRR-A, as well as the fundamental rule embodied in Article 4 of the Civil Code on prospectivity of laws, the Court holds that theprocurement process for the implementation of the CP I project is governed by EO 40 and its IRR, not RA 9184.Under EO 40, the award of the contract to privaterespondent China Road & Bridge Corporation is validSection 25 of EO 40 provides that "[t]he approved budget of the contract shall be the upper limit or ceiling of the bid price. Bid prices which exceed this ceiling shall be disqualified outright fromfurther participating in the bidding. There shall be no lower limit to the amount of the award. x x x" It should be observed that this text is almost similar to the wording of Section 31 of RA 9184,relied upon by the petitioners in contending that since the bid price of private respondent China Road & Bridge Corporation exceeded the ABC, then it should not have been awarded thecontract for the CP I project.Nonetheless, EO 40 expressly recognizes as an exception to its scope and application those government commitments with respect to bidding and award of contracts financed partly or whollywith funds from international financing institutions as well as from bilateral and other similar foreign sources. The pertinent portion of Section 1 of EO 40 is quoted anew:SEC. 1. Scope and Application. x x xNothing in this Order shall negate any existing and future government commitments with respect to the bidding and award of contracts financed partly or wholly with funds from internationalfinancing institutions as well as from bilateral and similar foreign sources.In relation thereto, Section 4 of RA 4860, as amended, was correctly cited by the respondents as likewise authorizing the President, in the contracting of any loan, credit or indebtednessthereunder, "when necessary, agree to waive or modify the application of any law granting preferences or imposing restrictions on international competitive bidding x x x." The said provision oflaw further provides that "the method and procedure in the comparison of bids shall be the subject of agreement between the Philippine Government and the lending institution."Consequently, in accordance with these applicable laws, the procurement of goods and services for the CP I project is governed by the corresponding loan agreement entered into by thegovernment and the JBIC, i.e., Loan Agreement No. PH-P204. The said loan agreement stipulated that the procurement of goods and services for the Arterial Road Links Development Project(Phase IV), of which CP I is a component, is to be governed by the JBIC Procurement Guidelines. Section 5.06, Part II (International Competitive Bidding) thereof quoted earlier reads:Section 5.06. Evaluation and Comparison of Bidsxxx(e) Any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified is not permitted. 62It is clear that the JBIC Procurement Guidelines proscribe the imposition of ceilings on bid prices. On the other hand, it enjoins the award of the contract to the bidder whose bid has beendetermined to be the lowest evaluated bid. The pertinent provision, quoted earlier, is reiterated, thus:Section 5.09. Award of Contract

The contract is to be awarded to the bidder whose bid has been determined to be the lowest evaluated bid and who meets the appropriate standards of capability and financial resources. Abidder shall not be required as a condition of award to undertake responsibilities or work not stipulated in the specifications or to modify the bid. 63Since these terms and conditions are made part of Loan Agreement No. PH-P204, the government is obliged to observe and enforce the same in the procurement of goods and services forthe CP I project. As shown earlier, private respondent China Road & Bridge Corporations bid was the lowest evaluated bid, albeit 28.95% higher than the ABC. In accordance with the JBICProcurement Guidelines, therefore, it was correctly awarded the contract for the CP I project.Even if RA 9184 were to be applied retroactively, the terms of the Exchange of Notes dated December 27, 1999 and Loan Agreement No. PH-P204 would still govern the procurement for theCP I projectFor clarity, Section 4 of RA 9184 is quoted anew, thus:SEC. 4. Scope and Applications. This Act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local or foreign, byall branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or controlled corporations and local government units, subject tothe provisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shallbe observed.The petitioners, in order to place the procurement process undertaken for the CP I project within the ambit of RA 9184, vigorously assert that Loan Agreement No. PH-P204 is neither a treaty,an international agreement nor an executive agreement. They cite Executive Order No. 459 dated November 25, 1997 where the three agreements are defined in this wise:a) International agreement shall refer to a contract or understanding, regardless of nomenclature, entered into between the Philippines and another government in written formand governed by international law, whether embodied in a single instrument or in two or more related instruments.b) Treaties international agreements entered into by the Philippines which require legislative concurrence after executive ratification. This term may include compacts likeconventions, declarations, covenants and acts.c) Executive agreements similar to treaties except that they do not require legislative concurrence.64The petitioners mainly argue that Loan Agreement No. PH-P204 does not fall under any of the three categories because to be any of the three, an agreement had to be one where the partiesare the Philippines as a State and another State. The JBIC, the petitioners maintain, is a Japanese banking agency, which presumably has a separate juridical personality from the JapaneseGovernment.The petitioners arguments fail to persuade. The Court holds that Loan Agreement No. PH-P204 taken in conjunction with the Exchange of Notes dated December 27, 1999 between theJapanese Government and the Philippine Government is an executive agreement.To recall, Loan Agreement No. PH-P204 was executed by and between the JBIC and the Philippine Government pursuant to the Exchange of Notes executed by and between Mr. YoshihisaAra, Ambassador Extraordinary and Plenipotentiary of Japan to the Philippines, and then Foreign Affairs Secretary Siazon, in behalf of their respective governments. The Exchange of Notesexpressed that the two governments have reached an understanding concerning Japanese loans to be extended to the Philippines and that these loans were aimed at promoting our countryseconomic stabilization and development efforts.Loan Agreement No. PH-P204 was subsequently executed and it declared that it was so entered by the parties "[i]n the light of the contents of the Exchange of Notes between the Governmentof Japan and the Government of the Republic of the Philippines dated December 27, 1999, concerning Japanese loans to be extended with a view to promoting the economic stabilization anddevelopment efforts of the Republic of the Philippines." 65 Under the circumstances, the JBIC may well be considered an adjunct of the Japanese Government. Further, Loan Agreement No.PH-P204 is indubitably an integral part of the Exchange of Notes. It forms part of the Exchange of Notes such that it cannot be properly taken independent thereof.In this connection, it is well to understand the definition of an "exchange of notes" under international law. The term is defined in the United Nations Treaty Collection in this wise:An "exchange of notes" is a record of a routine agreement that has many similarities with the private law contract. The agreement consists of the exchange of two documents, each of theparties being in the possession of the one signed by the representative of the other. Under the usual procedure, the accepting State repeats the text of the offering State to record its assent.The signatories of the letters may be government Ministers, diplomats or departmental heads. The technique of exchange of notes is frequently resorted to, either because of its speedyprocedure, or, sometimes, to avoid the process of legislative approval.66It is stated that "treaties, agreements, conventions, charters, protocols, declarations, memoranda of understanding, modus vivendi and exchange of notes" all refer to "international instrumentsbinding at international law."67 It is further explained thatAlthough these instruments differ from each other by title, they all have common features and international law has applied basically the same rules to all these instruments. These rules arethe result of long practice among the States, which have accepted them as binding norms in their mutual relations. Therefore, they are regarded as international customary law. Since therewas a general desire to codify these customary rules, two international conventions were negotiated. The 1969 Vienna Convention on the Law of Treaties ("1969 Vienna Convention"), whichentered into force on 27 January 1980, contains rules for treaties concluded between States. The 1986 Vienna Convention on the Law of Treaties between States and InternationalOrganizations ("1986 Vienna Convention"), which has still not entered into force, added rules for treaties with international organizations as parties. Both the 1969 Vienna Convention and the1986 Vienna Convention do not distinguish between the different designations of these instruments. Instead, their rules apply to all of those instruments as long as they meet the commonrequirements.68Significantly, an exchange of notes is considered a form of an executive agreement, which becomes binding through executive action without the need of a vote by the Senate or Congress.The following disquisition by Francis B. Sayre, former United States High Commissioner to the Philippines, entitled "The Constitutionality of Trade Agreement Acts," quoted in Commissioner ofCustoms v. Eastern Sea Trading,69 is apropos:Agreements concluded by the President which fall short of treaties are commonly referred to as executive agreements and are no less common in our scheme of government than are themore formal instruments treaties and conventions. They sometimes take the form of exchange of notes and at other times that of more formal documents denominated "agreements" or"protocols". The point where ordinary correspondence between this and other governments ends and agreements whether denominated executive agreements or exchange of notes orotherwise begin, may sometimes be difficult of ready ascertainment. It would be useless to undertake to discuss here the large variety of executive agreements as such, concluded from timeto time. Hundreds of executive agreements, other than those entered into under the trade-agreements act, have been negotiated with foreign governments. x x x 70The Exchange of Notes dated December 27, 1999, stated, inter alia, that the Government of Japan would extend loans to the Philippines with a view to promoting its economic stabilizationand development efforts; Loan I in the amount of Y79,8651,000,000 would be extended by the JBIC to the Philippine Government to implement the projects in the List A (including the ArterialRoad Links Development Project - Phase IV); and that such loan (Loan I) would be used to cover payments to be made by the Philippine executing agencies to suppliers, contractors and/orconsultants of eligible source countries under such contracts as may be entered into between them for purchases of products and/or services required for the implementation of the projectsenumerated in the List A.71With respect to the procurement of the goods and services for the projects, it bears reiterating that as stipulated:3. The Government of the Republic of the Philippines will ensure that the products and/or services mentioned in sub-paragraph (1) of paragraph 3 of Part I and sub-paragraph (1) of paragraph4 of Part II are procured in accordance with the guidelines for procurement of the Bank, which set forth, inter alia, the procedures of international tendering to be followed except where suchprocedures are inapplicable or inappropriate.72The JBIC Procurements Guidelines, as quoted earlier, forbids any procedure under which bids above or below a predetermined bid value assessment are automatically disqualified. Succinctlyput, it absolutely prohibits the imposition of ceilings on bids.

Under the fundamental principle of international law of pacta sunt servanda, 73 which is, in fact, embodied in Section 4 of RA 9184 as it provides that "[a]ny treaty or international or executiveagreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed," the DPWH, as the executing agency of the projects financed by LoanAgreement No. PH-P204, rightfully awarded the contract for the implementation of civil works for the CP I project to private respondent China Road & Bridge Corporation.WHEREFORE, premises considered, the petition is DISMISSED.SO ORDERED.

G.R. No. 159618 February 1, 2011

BAYAN MUNA, as represented by Rep. SATUR OCAMPO, Rep. CRISPIN BELTRAN, and Rep. LIZA L. MAZA, Petitioner,vs.ALBERTO ROMULO, in his capacity as Executive Secretary, and BLAS F. OPLE, in his capacity as Secretary of Foreign Affairs, Respondents.DECISIONVELASCO, JR., J.:The CaseThis petition1 for certiorari, mandamus and prohibition under Rule 65 assails and seeks to nullify the Non-Surrender Agreement concluded by and between the Republic of the Philippines (RP)and the United States of America (USA).The FactsPetitioner Bayan Muna is a duly registered party-list group established to represent the marginalized sectors of society. Respondent Blas F. Ople, now deceased, was the Secretary of ForeignAffairs during the period material to this case. Respondent Alberto Romulo was impleaded in his capacity as then Executive Secretary. 2Rome Statute of the International Criminal CourtHaving a key determinative bearing on this case is the Rome Statute 3 establishing the International Criminal Court (ICC) with "the power to exercise its jurisdiction over persons for the mostserious crimes of international concern x x x and shall be complementary to the national criminal jurisdictions."4 The serious crimes adverted to cover those considered grave underinternational law, such as genocide, crimes against humanity, war crimes, and crimes of aggression. 5On December 28, 2000, the RP, through Charge dAffaires Enrique A. Manalo, signed the Rome Statute which, by its terms, is "subject to ratification, acceptance or approval" by the signatorystates.6 As of the filing of the instant petition, only 92 out of the 139 signatory countries appear to have completed the ratification, approval and concurrence process. The Philippines is notamong the 92.RP-US Non-Surrender AgreementOn May 9, 2003, then Ambassador Francis J. Ricciardone sent US Embassy Note No. 0470 to the Department of Foreign Affairs (DFA) proposing the terms of the non-surrender bilateralagreement (Agreement, hereinafter) between the USA and the RP.Via Exchange of Notes No. BFO-028-03 7 dated May 13, 2003 (E/N BFO-028-03, hereinafter), the RP, represented by then DFA Secretary Ople, agreed with and accepted the US proposalsembodied under the US Embassy Note adverted to and put in effect the Agreement with the US government. In esse, the Agreement aims to protect what it refers to and defines as "persons"of the RP and US from frivolous and harassment suits that might be brought against them in international tribunals. 8 It is reflective of the increasing pace of the strategic security and defensepartnership between the two countries. As of May 2, 2003, similar bilateral agreements have been effected by and between the US and 33 other countries. 9The Agreement pertinently provides as follows:1. For purposes of this Agreement, "persons" are current or former Government officials, employees (including contractors), or military personnel or nationals of one Party.2. Persons of one Party present in the territory of the other shall not, absent the express consent of the first Party,(a) be surrendered or transferred by any means to any international tribunal for any purpose, unless such tribunal has been established by the UN Security Council, or(b) be surrendered or transferred by any means to any other entity or third country, or expelled to a third country, for the purpose of surrender to or transfer to anyinternational tribunal, unless such tribunal has been established by the UN Security Council.3. When the [US] extradites, surrenders, or otherwise transfers a person of the Philippines to a third country, the [US] will not agree to the surrender or transfer of that person bythe third country to any international tribunal, unless such tribunal has been established by the UN Security Council, absent the express consent of the Government of the Republicof the Philippines [GRP].4. When the [GRP] extradites, surrenders, or otherwise transfers a person of the [USA] to a third country, the [GRP] will not agree to the surrender or transfer of that person by thethird country to any international tribunal, unless such tribunal has been established by the UN Security Council, absent the express consent of the Government of the [US].5. This Agreement shall remain in force until one year after the date on which one party notifies the other of its intent to terminate the Agreement. The provisions of this Agreementshall continue to apply with respect to any act occurring, or any allegation arising, before the effective date of termination.In response to a query of then Solicitor General Alfredo L. Benipayo on the status of the non-surrender agreement, Ambassador Ricciardone replied in his letter of October 28, 2003 that theexchange of diplomatic notes constituted a legally binding agreement under international law; and that, under US law, the said agreement did not require the advice and consent of the USSenate.10In this proceeding, petitioner imputes grave abuse of discretion to respondents in concluding and ratifying theAgreement and prays that it be struck down as unconstitutional, or at leastdeclared as without force and effect.For their part, respondents question petitioners standing to maintain a suit and counter that the Agreement, being in the nature of an executive agreement, does not require Senateconcurrence for its efficacy. And for reasons detailed in their comment, respondents assert the constitutionality of the Agreement.The IssuesI. WHETHER THE [RP] PRESIDENT AND THE [DFA] SECRETARY x x x GRAVELY ABUSED THEIR DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION FORCONCLUDING THE RP-US NON SURRENDER AGREEMENT BY MEANS OF [E/N] BFO-028-03 DATED 13 MAY 2003, WHEN THE PHILIPPINE GOVERNMENT HAS ALREADYSIGNED THE ROME STATUTE OF THE [ICC] ALTHOUGH THIS IS PENDING RATIFICATION BY THE PHILIPPINE SENATE.A. Whether by entering into the x x x Agreement Respondents gravely abused their discretion when they capriciously abandoned, waived and relinquished our only legitimaterecourse through theRome Statute of the [ICC] to prosecute and try "persons" as defined in the x x x Agreement, x x x or literally any conduit of American interests, who havecommitted crimes of genocide, crimes against humanity, war crimes and the crime of aggression, thereby abdicating Philippine Sovereignty.B. Whether after the signing and pending ratification of the Rome Statute of the [ICC] the [RP] President and the [DFA] Secretary x x x are obliged by the principle of good faith torefrain from doing all acts which would substantially impair the value of the undertaking as signed.C. Whether the x x x Agreement constitutes an act which defeats the object and purpose of theRome Statute of the International Criminal Court and contravenes the obligation ofgood faith inherent in the signature of the President affixed on the Rome Statute of the International Criminal Court, and if so whether the x x x Agreement is void andunenforceable on this ground.D. Whether the RP-US Non-Surrender Agreement is void and unenforceable for grave abuse of discretion amounting to lack or excess of jurisdiction in connection with itsexecution.

II. WHETHER THE RP-US NON SURRENDER AGREEMENT IS VOID AB INITIO FOR CONTRACTING OBLIGATIONS THAT ARE EITHER IMMORAL OR OTHERWISE AT VARIANCEWITH UNIVERSALLY RECOGNIZED PRINCIPLES OF INTERNATIONAL LAW.III. WHETHER THE x x x AGREEMENT IS VALID, BINDING AND EFFECTIVE WITHOUT THE CONCURRENCE BY AT LEAST TWO-THIRDS (2/3) OF ALL THE MEMBERS OF THESENATE x x x.11The foregoing issues may be summarized into two: first, whether or not the Agreement was contracted validly, which resolves itself into the question of whether or not respondents gravelyabused their discretion in concluding it; and second, whether or not the Agreement, which has not been submitted to the Senate for concurrence, contravenes and undermines the RomeStatute and other treaties. But because respondents expectedly raised it, we shall first tackle the issue of petitioners legal standing.The Courts RulingThis petition is bereft of merit.Procedural Issue: Locus Standi of PetitionerPetitioner, through its three party-list representatives, contends that the issue of the validity or invalidity of the Agreement carries with it constitutional significance and is of paramountimportance that justifies its standing. Cited in this regard is what is usually referred to as the emergency powers cases, 12 in which ordinary citizens and taxpayers were accorded the personalityto question the constitutionality of executive issuances.Locus standi is "a right of appearance in a court of justice on a given question." 13 Specifically, it is "a partys personal and substantial interest in a case where he has sustained or will sustaindirect injury as a result" 14 of the act being challenged, and "calls for more than just a generalized grievance." 15 The term "interest" refers to material interest, as distinguished from one that ismerely incidental.16 The rationale for requiring a party who challenges the validity of a law or international agreement to allege such a personal stake in the outcome of the controversy is "toassure the concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." 17Locus standi, however, is merely a matter of procedure and it has been recognized that, in some cases, suits are not brought by parties who have been personally injured by the operation of alaw or any other government act, but by concerned citizens, taxpayers, or voters who actually sue in the public interest. 18 Consequently, in a catena of cases,19 this Court has invariablyadopted a liberal stance on locus standi.Going by the petition, petitioners representatives pursue the instant suit primarily as concerned citizens raising issues of transcendental importance, both for the Republic and the citizenry asa whole.When suing as a citizen to question the validity of a law or other government action, a petitioner needs to meet certain specific requirements before he can be clothed with standing. Francisco,Jr. v. Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc.20 expounded on this requirement, thus:In a long line of cases, however, concerned citizens, taxpayers and legislators when specific requirements have been met have been given standing by this Court.When suing as a citizen, the interest of the petitioner assailing the constitutionality of a statute must be direct and personal. He must be able to show, not only that the law or any governmentact is invalid, but also that he sustained or is in imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. Itmust appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens orpenalties by reason of the statute or act complained of. In fine, when the proceeding involves the assertion of a public right, the mere fact that he is a citizen satisfies the requirement ofpersonal interest.21In the case at bar, petitioners representatives have complied with the qualifying conditions or specific requirements exacted under the locus standi rule. As citizens, their interest in the subjectmatter of the petition is direct and personal. At the very least, their assertions questioning the Agreement are made of a public right, i.e., to ascertain that the Agreement did not go againstestablished national policies, practices, and obligations bearing on the States obligation to the community of nations.At any event, the primordial importance to Filipino citizens in general of the issue at hand impels the Court to brush aside the procedural barrier posed by the traditional requirement of locusstandi, as we have done in a long line of earlier cases, notably in the old but oft-cited emergency powers cases 22 and Kilosbayan v. Guingona, Jr.23In cases of transcendental importance, wewrote again in Bayan v. Zamora,24 "The Court may relax the standing requirements and allow a suit to prosper even where there is no direct injury to the party claiming the right of judicialreview."Moreover, bearing in mind what the Court said in Taada v. Angara, "that it will not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involvegrave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or department of the government," 25 we cannot but resolve head on theissues raised before us. Indeed, where an action of any branch of government is seriously alleged to have infringed the Constitution or is done with grave abuse of discretion, it becomes notonly the right but in fact the duty of the judiciary to settle it. As in this petition, issues are precisely raised putting to the fore the propriety of the Agreement pending the ratification of the RomeStatute.Validity of the RP-US Non-Surrender AgreementPetitioners initial challenge against the Agreement relates to form, its threshold posture being that E/N BFO-028-03 cannot be a valid medium for concluding the Agreement.Petitioners contentionperhaps taken unaware of certain well-recognized international doctrines, practices, and jargonsis untenable. One of these is the doctrine of incorporation, asexpressed in Section 2, Article II of the Constitution, wherein the Philippines adopts the generally accepted principles of international law and international jurisprudence as part of the law ofthe land and adheres to the policy of peace, cooperation, and amity with all nations. 26 An exchange of notes falls "into the category of inter-governmental agreements," 27 which is aninternationally accepted form of international agreement. The United Nations Treaty Collections (Treaty Reference Guide) defines the term as follows:An "exchange of notes" is a record of a routine agreement, that has many similarities with the private law contract. The agreement consists of the exchange of two documents, each of theparties being in the possession of the one signed by the representative of the other. Under the usual procedure, the accepting State repeats the text of the offering State to record its assent.The signatories of the letters may be government Ministers, diplomats or departmental heads. The technique of exchange of notes is frequently resorted to, either because of its speedyprocedure, or, sometimes, to avoid the process of legislative approval.28In another perspective, the terms "exchange of notes" and "executive agreements" have been used interchangeably, exchange of notes being considered a form of executive agreement thatbecomes binding through executive action.29 On the other hand, executive agreements concluded by the President "sometimes take the form of exchange of notes and at other times that ofmore formal documents denominated agreements or protocols." 30 As former US High Commissioner to the Philippines Francis B. Sayre observed in his work, The Constitutionality ofTrade Agreement Acts:The point where ordinary correspondence between this and other governments ends and agreements whether denominated executive agreements or exchange of notes or otherwise begin, may sometimes be difficult of ready ascertainment.31 x x xIt is fairly clear from the foregoing disquisition that E/N BFO-028-03be it viewed as the Non-Surrender Agreement itself, or as an integral instrument of acceptance thereof or as consent tobe boundis a recognized mode of concluding a legally binding international written contract among nations.Senate Concurrence Not RequiredArticle 2 of the Vienna Convention on the Law of Treaties defines a treaty as "an international agreement concluded between states in written form and governed by international law, whetherembodied in a single instrument or in two or more related instruments and whatever its particular designation." 32 International agreements may be in the form of (1) treaties that require

legislative concurrence after executive ratification; or (2) executive agreements that are similar to treaties, except that they do not require legislative concurrence and are usually less formaland deal with a narrower range of subject matters than treaties.33Under international law, there is no difference between treaties and executive agreements in terms of their binding effects on the contracting states concerned, 34 as long as the negotiatingfunctionaries have remained within their powers. 35 Neither, on the domestic sphere, can one be held valid if it violates the Constitution. 36Authorities are, however, agreed that one is distinctfrom another for accepted reasons apart from the concurrence-requirement aspect. 37 As has been observed by US constitutional scholars, a treaty has greater "dignity" than an executiveagreement, because its constitutional efficacy is beyond doubt, a treaty having behind it the authority of the President, the Senate, and the people; 38 a ratified treaty, unlike an executiveagreement, takes precedence over any prior statutory enactment.39Petitioner parlays the notion that the Agreement is of dubious validity, partaking as it does of the nature of a treaty; hence, it must be duly concurred in by the Senate. Petitioner takes a cuefrom Commissioner of Customs v. Eastern Sea Trading, in which the Court reproduced the following observations made by US legal scholars: "[I]nternational agreements involving politicalissues or changes of national policy and those involving international arrangements of a permanent character usually take the form of treaties [while] those embodying adjustments of detailcarrying out well established national policies and traditions and those involving arrangements of a more or less temporary nature take the form of executive agreements." 40Pressing its point, petitioner submits that the subject of the Agreement does not fall under any of the subject-categories that are enumerated in the Eastern Sea Trading case, and that may becovered by an executive agreement, such as commercial/consular relations, most-favored nation rights, patent rights, trademark and copyright protection, postal and navigation arrangementsand settlement of claims.In addition, petitioner foists the applicability to the instant case of Adolfo v. CFI of Zambales and Merchant,41holding that an executive agreement through an exchange of notes cannot be usedto amend a treaty.We are not persuaded.The categorization of subject matters that may be covered by international agreements mentioned in Eastern Sea Trading is not cast in stone. There are no hard and fast rules on the proprietyof entering, on a given subject, into a treaty or an executive agreement as an instrument of international relations. The primary consideration in the choice of the form of agreement is theparties intent and desire to craft an international agreement in the form they so wish to further their respective interests. Verily, the matter of form takes a back seat when it comes toeffectiveness and binding effect of the enforcement of a treaty or an executive agreement, as the parties in either international agreement each labor under the pacta sunt servanda42 principle.As may be noted, almost half a century has elapsed since the Court rendered its decision in Eastern Sea Trading. Since then, the conduct of foreign affairs has become more complex and thedomain of international law wider, as to include such subjects as human rights, the environment, and the sea. In fact, in the US alone, the executive agreements executed by its President from1980 to 2000 covered subjects such as defense, trade, scientific cooperation, aviation, atomic energy, environmental cooperation, peace corps, arms limitation, and nuclear safety, amongothers.43 Surely, the enumeration in Eastern Sea Trading cannot circumscribe the option of each state on the matter of which the international agreement format would be convenient to serveits best interest. As Francis Sayre said in his work referred to earlier:x x x It would be useless to undertake to discuss here the large variety of executive agreements as such concluded from time to time. Hundreds of executive agreements, other than thoseentered into under the trade-agreement act, have been negotiated with foreign governments. x x x They cover such subjects as the inspection of vessels, navigation dues, income tax onshipping profits, the admission of civil air craft, custom matters and commercial relations generally, international claims, postal matters, the registration of trademarks and copyrights, etc. x x xAnd lest it be overlooked, one type of executive agreement is a treaty-authorized 44 or a treaty-implementing executive agreement, 45 which necessarily would cover the same matters subject ofthe underlying treaty.But over and above the foregoing considerations is the fact thatsave for the situation and matters contemplated in Sec. 25, Art. XVIII of the Constitution 46when a treaty is required, theConstitution does not classify any subject, like that involving political issues, to be in the form of, and ratified as, a treaty. What the Constitution merely prescribes is that treaties need theconcurrence of the Senate by a vote defined therein to complete the ratification process.Petitioners reliance on Adolfo47 is misplaced, said case being inapplicable owing to different factual milieus. There, the Court held that an executive agreement cannot be used to amend aduly ratified and existing treaty, i.e., the Bases Treaty. Indeed, an executive agreement that does not require the concurrence of the Senate for its ratification may not be used to amend a treatythat, under the Constitution, is the product of the ratifying acts of the Executive and the Senate. The presence of a treaty, purportedly being subject to amendment by an executive agreement,does not obtain under the premises.Considering the above discussion, the Court need not belabor at length the third main issue raised, referring to the validity and effectivity of the Agreement without the concurrence by at leasttwo-thirds of all the members of the Senate. The Court has, in Eastern Sea Trading,48 as reiterated in Bayan,49 given recognition to the obligatory effect of executive agreements without theconcurrence of the Senate:x x x [T]he right of the Executive to enter into binding agreements without the necessity of subsequent Congressional approval has been confirmed by long usage. From the earliest days ofour history, we have entered executive agreements covering such subjects as commercial and consular relations, most favored-nation rights, patent rights, trademark and copyright protection,postal and navigation arrangements and the settlement of claims. The validity of these has never been seriously questioned by our courts.The Agreement Not in Contravention of the Rome StatuteIt is the petitioners next contention that the Agreement undermines the establishment of the ICC and is null and void insofar as it unduly restricts the ICCs jurisdiction and infringes upon theeffectivity of the Rome Statute. Petitioner posits that the Agreement was constituted solely for the purpose of providing individuals or groups of individuals with immunity from the jurisdiction ofthe ICC; and such grant of immunity through non-surrender agreements allegedly does not legitimately fall within the scope of Art. 98 of the Rome Statute. It concludes that state parties withnon-surrender agreements are prevented from meeting their obligations under the Rome Statute, thereby constituting a breach of Arts. 27, 50 86,51 8952 and 9053 thereof.Petitioner stresses that the overall object and purpose of the Rome Statute is to ensure that those responsible for the worst possible crimes are brought to justice in all cases, primarily bystates, but as a last resort, by the ICC; thus, any agreementlike the non-surrender agreementthat precludes the ICC from exercising its complementary function of acting when a state isunable to or unwilling to do so, defeats the object and purpose of the Rome Statute.Petitioner would add that the President and the DFA Secretary, as representatives of a signatory of the Rome Statute, are obliged by the imperatives of good faith to refrain from performingacts that substantially devalue the purpose and object of the Statute, as signed. Adding a nullifying ingredient to the Agreement, according to petitioner, is the fact that it has an immoralpurpose or is otherwise at variance with a priorly executed treaty.Contrary to petitioners pretense, the Agreement does not contravene or undermine, nor does it differ from, the Rome Statute. Far from going against each other, one complements the other.As a matter of fact, the principle of complementarity underpins the creation of the ICC. As aptly pointed out by respondents and admitted by petitioners, the jurisdiction of the ICC is to "becomplementary to national criminal jurisdictions [of the signatory states]." 54 Art. 1 of the Rome Statute pertinently provides:ArticleThe Court

An International Crimininal Court ("the Court") is hereby established. It x x x shall have the power to exercise its jurisdiction over persons for the most serious crimes of internationalconcern, as referred to in this Statute, and shall be complementary to national criminal jurisdictions. The jurisdiction and functioning of the Court shall be governed by the provisions ofthis Statute. (Emphasis ours.)Significantly, the sixth preambular paragraph of the Rome Statute declares that "it is the duty of every State to exercise its criminal jurisdiction over those responsible for international crimes."This provision indicates that primary jurisdiction over the so-called international crimes rests, at the first instance, with the state where the crime was committed; secondarily, with the ICC inappropriate situations contemplated under Art. 17, par. 155 of the Rome Statute.

Of particular note is the application of the principle of ne bis in idem56 under par. 3 of Art. 20, Rome Statute, which again underscores the primacy of the jurisdiction of a state vis-a-vis that ofthe ICC. As far as relevant, the provision states that "no person who has been tried by another court for conduct x x x [constituting crimes within its jurisdiction] shall be tried by the[International Criminal] Court with respect to the same conduct x x x."The foregoing provisions of the Rome Statute, taken collectively, argue against the idea of jurisdictional conflict between the Philippines, as party to the non-surrender agreement, and the ICC;or the idea of the Agreement substantially impairing the value of the RPs undertaking under the Rome Statute. Ignoring for a while the fact that the RP signed the Rome Statute ahead ofthe Agreement, it is abundantly clear to us that the Rome Statute expressly recognizes the primary jurisdiction of states, like the RP, over serious crimes committed within their respectiveborders, the complementary jurisdiction of the ICC coming into play only when the signatory states are unwilling or unable to prosecute.Given the above consideration, petitioners suggestionthat the RP, by entering into the Agreement, violated its duty required by the imperatives of good faith and breached its commitmentunder the Vienna Convention57 to refrain from performing any act tending to impair the value of a treaty, e.g., the Rome Statutehas to be rejected outright. For nothing in the provisions ofthe Agreement, in relation to the Rome Statute, tends to diminish the efficacy of the Statute, let alone defeats the purpose of the ICC. Lest it be overlooked, the Rome Statute contains aproviso that enjoins the ICC from seeking the surrender of an erring person, should the process require the requested state to perform an act that would violate some international agreement ithas entered into. We refer to Art. 98(2) of the Rome Statute, which reads:Article 98Cooperation with respect to waiver of immunityand consent to surrenderxxxx2. The Court may not proceed with a request for surrender which would require the requested State to act inconsistently with its obligations under international agreements pursuant to whichthe consent of a sending State is required to surrender a person of that State to the Court, unless the Court can first obtain the cooperation of the sending State for the giving of consent for thesurrender.Moreover, under international law, there is a considerable difference between a State-Party and a signatory to a treaty. Under the Vienna Convention on the Law of Treaties, a signatory stateis only obliged to refrain from acts which would defeat the object and purpose of a treaty; 58 whereas a State-Party, on the other hand, is legally obliged to follow all the provisions of a treaty ingood faith.In the instant case, it bears stressing that the Philippines is only a signatory to the Rome Statute and not a State-Party for lack of ratification by the Senate. Thus, it is only obliged to refrainfrom acts which would defeat the object and purpose of the Rome Statute. Any argument obliging the Philippines to follow any provision in the treaty would be premature.As a result, petitioners argument that State-Parties with non-surrender agreements are prevented from meeting their obligations under the Rome Statute, specifically Arts. 27, 86, 89 and 90,must fail. These articles are only legally binding upon State-Parties, not signatories.Furthermore, a careful reading of said Art. 90 would show that the Agreement is not incompatible with the Rome Statute. Specifically, Art. 90(4) provides that "[i]f the requesting State is a Statenot Party to this Statute the requested State, if it is not under an international obligation to extradite the person to the requesting State, shall give priority to the request for surrender from theCourt. x x x" In applying the provision, certain undisputed facts should be pointed out: first, the US is neither a State-Party nor a signatory to the Rome Statute; and second, there is aninternational agreement between the US and the Philippines regarding extradition or surrender of persons, i.e., the Agreement. Clearly, even assuming that the Philippines is a State-Party, theRome Statute still recognizes the primacy of international agreements entered into between States, even when one of the States is not a State-Party to the Rome Statute.Sovereignty Limited by International AgreementsPetitioner next argues that the RP has, through the Agreement, abdicated its sovereignty by bargaining away the jurisdiction of the ICC to prosecute US nationals, governmentofficials/employees or military personnel who commit serious crimes of international concerns in the Philippines. Formulating petitioners argument a bit differently, the RP, by entering intothe Agreement, does thereby abdicate its sovereignty, abdication being done by its waiving or abandoning its right to seek recourse through the Rome Statute of the ICC for erring Americanscommitting international crimes in the country.We are not persuaded. As it were, the Agreement is but a form of affirmance and confirmance of the Philippines national criminal jurisdiction. National criminal jurisdiction being primary, asexplained above, it is always the responsibility and within the prerogative of the RP either to prosecute criminal offenses equally covered by the Rome Statute or to accede to the jurisdiction ofthe ICC. Thus, the Philippines may decide to try "persons" of the US, as the term is understood in the Agreement, under our national criminal justice system. Or it may opt not to exercise itscriminal jurisdiction over its erring citizens or over US "persons" committing high crimes in the country and defer to the secondary criminal jurisdiction of the ICC over them. As to "persons" ofthe US whom the Philippines refuses to prosecute, the country would, in effect, accord discretion to the US to exercise either its national criminal jurisdiction over the "person" concerned or togive its consent to the referral of the matter to the ICC for trial. In the same breath, the US must extend the same privilege to the Philippines with respect to "persons" of the RP committinghigh crimes within US territorial jurisdiction.In the context of the Constitution, there can be no serious objection to the Philippines agreeing to undertake the things set forth in the Agreement. Surely, one State can agree to waivejurisdictionto the extent agreed uponto subjects of another State due to the recognition of the principle of extraterritorial immunity. What the Court wrote in Nicolas v. Romulo59a caseinvolving the implementation of the criminal jurisdiction provisions of the RP-US Visiting Forces Agreementis apropos:Nothing in the Constitution prohibits such agreements recognizing immunity from jurisdiction or some aspects of jurisdiction (such as custody), in relation to long-recognized subjects of suchimmunity like Heads of State, diplomats and members of the armed forces contingents of a foreign State allowed to enter another States territory. x x xTo be sure, the nullity of the subject non-surrender agreement cannot be predicated on the postulate that some of its provisions constitute a virtual abdication of its sovereignty. Almost everytime a state enters into an international agreement, it voluntarily sheds off part of its sovereignty. The Constitution, as drafted, did not envision a reclusive Philippines isolated from the rest ofthe world. It even adheres, as earlier stated, to the policy of cooperation and amity with all nations.60By their nature, treaties and international agreements actually have a limiting effect on the otherwise encompassing and absolute nature of sovereignty. By their voluntary act, nations maydecide to surrender or waive some aspects of their state power or agree to limit the exercise of their otherwise exclusive and absolute jurisdiction. The usual underlying consideration in thispartial surrender may be the greater benefits derived from a pact or a reciprocal undertaking of one contracting party to grant the same privileges or immunities to the other. On the rationalethat the Philippines has adopted the generally accepted principles of international law as part of the law of the land, a portion of sovereignty may be waived without violating theConstitution.61 Such waiver does not amount to an unconstitutional diminution or deprivation of jurisdiction of Philippine courts.62Agreement Not Immoral/Not at Variancewith Principles of International LawPetitioner urges that the Agreement be struck down as void ab initio for imposing immoral obligations and/or being at variance with allegedly universally recognized principles of internationallaw. The immoral aspect proceeds from the fact that the Agreement, as petitioner would put it, "leaves criminals immune from responsibility for unimaginable atrocities that deeply shock theconscience of humanity; x x x it precludes our country from delivering an American criminal to the [ICC] x x x." 63The above argument is a kind of recycling of petitioners earlier position, which, as already discussed, contends that the RP, by entering into the Agreement, virtually abdicated its sovereigntyand in the process undermined its treaty obligations under the Rome Statute, contrary to international law principles.64The Court is not persuaded. Suffice it to state in this regard that the non-surrender agreement, as aptly described by the Solicitor General, "is an assertion by the Philippines of its desire to tryand punish crimes under its national law. x x x The agreement is a recognition of the primacy and competence of the countrys judiciary to try offenses under its national criminal laws anddispense justice fairly and judiciously."

Petitioner, we believe, labors under the erroneous impression that the Agreement would allow Filipinos and Americans committing high crimes of international concern to escape criminal trialand punishment. This is manifestly incorrect. Persons who may have committed acts penalized under the Rome Statute can be prosecuted and punished in the Philippines or in the US; or withthe consent of the RP or the US, before the ICC, assuming, for the nonce, that all the formalities necessary to bind both countries to the Rome Statute have been met. For perspective, whatthe Agreement contextually prohibits is the surrender by either party of individuals to international tribunals, like the ICC, without the consent of the other party, which may desire to prosecutethe crime under its existing laws. With the view we take of things, there is nothing immoral or violative of international law concepts in the act of the Philippines of assuming criminal jurisdictionpursuant to the non-surrender agreement over an offense considered criminal by both Philippine laws and the Rome Statute.No Grave Abuse of DiscretionPetitioners final point revolves around the necessity of the Senates concurrence in the Agreement. And without specifically saying so, petitioner would argue that the non-surrender agreementwas executed by the President, thru the DFA Secretary, in grave abuse of discretion.The Court need not delve on and belabor the first portion of the above posture of petitioner, the same having been discussed at length earlier on. As to the second portion, We wish to statethat petitioner virtually faults the President for performing, through respondents, a task conferred the President by the Constitutionthe power to enter into international agreements.By constitutional fiat and by the nature of his or her office, the President, as head of state and government, is the sole organ and authority in the external affairs of the country. 65 TheConstitution vests in the President the power to enter into international agreements, subject, in appropriate cases, to the required concurrence votes of the Senate. But as earlier indicated,executive agreements may be validly entered into without such concurrence. As the President wields vast powers and influence, her conduct in the external affairs of the nation is, as Bayanwould put it, "executive altogether." The right of the President to enter into or ratify binding executive agreements has been confirmed by long practice. 66In thus agreeing to conclude the Agreement thru E/N BFO-028-03, then President Gloria Macapagal-Arroyo, represented by the Secretary of Foreign Affairs, acted within the scope of theauthority and discretion vested in her by the Constitution. At the end of the day, the Presidentby ratifying, thru her deputies, the non-surrender agreementdid nothing more than dischargea constitutional duty and exercise a prerogative that pertains to her office.While the issue of ratification of the Rome Statute is not determinative of the other issues raised herein, it may perhaps be pertinent to remind all and sundry that about the time this petitionwas interposed, such issue of ratification was laid to rest in Pimentel, Jr. v. Office of the Executive Secretary. 67 As the Court emphasized in said case, the power to ratify a treaty, the Statute inthat instance, rests with the President, subject to the concurrence of the Senate, whose role relative to the ratification of a treaty is limited merely to concurring in or withholding the ratification.And concomitant with this treaty-making power of the President is his or her prerogative to refuse to submit a treaty to the Senate; or having secured the latters consent to the ratification ofthe treaty, refuse to ratify it.68 This prerogative, the Court hastened to add, is the Presidents alone and cannot be encroached upon via a writ of mandamus. Barring intervening events, then,the Philippines remains to be just a signatory to the Rome Statute. Under Art. 125 69 thereof, the final acts required to complete the treaty process and, thus, bring it into force, insofar as thePhilippines is concerned, have yet to be done.Agreement Need Not Be in the Form of a TreatyOn December 11, 2009, then President Arroyo signed into law Republic Act No. (RA) 9851, otherwise known as the "Philippine Act on Crimes Against International Humanitarian Law,Genocide, and Other Crimes Against Humanity." Sec. 17 of RA 9851, particularly the second paragraph thereof, provides:Section 17. Jurisdiction. x x x xIn the interest of justice, the relevant Philippine authorities may dispense with the investigation or prosecution of a crime punishable under this Act if another court or international tribunal isalready conducting the investigation or undertaking the prosecution of such crime. Instead, the authorities may surrender or extradite suspected or accused persons in the Philippines to theappropriate international court, if any, or to another State pursuant to the applicable extradition laws and treaties. (Emphasis supplied.)A view is advanced that the Agreement amends existing municipal laws on the States obligation in relation to grave crimes against the law of nations, i.e., genocide, crimes against humanityand war crimes. Relying on the above-quoted statutory proviso, the view posits that the Philippine is required to surrender to the proper international tribunal those persons accused of thegrave crimes defined under RA 9851, if it does not exercise its primary jurisdiction to prosecute them.The basic premise rests on the interpretation that if it does not decide to prosecute a foreign national for violations of RA 9851, the Philippines has only two options, to wit: (1) surrender theaccused to the proper international tribunal; or (2) surrender the accused to another State if such surrender is "pursuant to the applicable extradition laws and treaties." But the Philippines mayexercise these options only in cases where "another court or international tribunal is already conducting the investigation or undertaking the prosecution of such crime;" otherwise, thePhilippines must prosecute the crime before its own courts pursuant to RA 9851.Posing the situation of a US national under prosecution by an international tribunal for any crime under RA 9851, the Philippines has the option to surrender such US national to theinternational tribunal if it decides not to prosecute such US national here. The view asserts that this option of the Philippines under Sec. 17 of RA 9851 is not subject to the consent of the US,and any derogation of Sec. 17 of RA 9851, such as requiring the consent of the US before the Philippines can exercise such option, requires an amendatory law. In line with this scenario, theview strongly argues that the Agreement prevents the Philippineswithout the consent of the USfrom surrendering to any international tribunal US nationals accused of crimes covered byRA 9851, and, thus, in effect amends Sec. 17 of RA 9851. Consequently, the view is strongly impressed that the Agreement cannot be embodied in a simple executive agreement in the formof an exchange of notes but must be implemented through an extradition law or a treaty with the corresponding formalities.Moreover, consonant with the foregoing view, citing Sec. 2, Art. II of the Constitution, where the Philippines adopts, as a national policy, the "generally accepted principles of international lawas part of the law of the land," the Court is further impressed to perceive the Rome Statute as declaratory of customary international law. In other words, the Statute embodies principles of lawwhich constitute customary international law or custom and for which reason it assumes the status of an enforceable domestic law in the context of the aforecited constitutional provision. As acorollary, it is argued that any derogation from the Rome Statute principles cannot be undertaken via a mere executive agreement, which, as an exclusive act of the executive branch, can onlyimplement, but cannot amend or repeal, an existing law. The Agreement, so the argument goes, seeks to frustrate the objects of the principles of law or alters customary rules embodied in theRome Statute.Prescinding from the foregoing premises, the view thus advanced considers the Agreement inefficacious, unless it is embodied in a treaty duly ratified with the concurrence of the Senate, thetheory being that a Senate- ratified treaty partakes of the nature of a municipal law that can amend or supersede another law, in this instance Sec. 17 of RA 9851 and the status of the RomeStatute as constitutive of enforceable domestic law under Sec. 2, Art. II of the Constitution.We are unable to lend cogency to the view thus taken. For one, we find that the Agreement does not amend or is repugnant to RA 9851. For another, the view does not clearly state whatprecise principles of law, if any, theAgreement alters. And for a third, it does not demonstrate in the concrete how the Agreement seeks to frustrate the objectives of the principles of lawsubsumed in the Rome Statute.Far from it, as earlier explained, the Agreement does not undermine the Rome Statute as the former merely reinforces the primacy of the national jurisdiction of the US and the Philippines inprosecuting criminal offenses committed by their respective citizens and military personnel, among others. The jurisdiction of the ICC pursuant to the Rome Statute over high crimes indicatedthereat is clearly and unmistakably complementary to the national criminal jurisdiction of the signatory states.Moreover, RA 9851 clearly: (1) defines and establishes the crimes against international humanitarian law, genocide and other crimes against humanity; 70 (2) provides penal sanctions andcriminal liability for their commission;71 and (3) establishes special courts for the prosecution of these crimes and for the State to exercise primary criminal jurisdiction. 72 Nowhere in RA 9851 isthere a proviso that goes against the tenor of theAgreement.The view makes much of the above quoted second par. of Sec. 17, RA 9851 as requiring the Philippine State to surrender to the proper international tribunal those persons accused of crimessanctioned under said law if it does not exercise its primary jurisdiction to prosecute such persons. This view is not entirely correct, for the above quoted proviso clearly provides discretion tothe Philippine State on whether to surrender or not a person accused of the crimes under RA 9851. The statutory proviso uses the word " may." It is settled doctrine in statutory construction

that the word "may" denotes discretion, and cannot be construed as having mandatory effect. 73 Thus, the pertinent second pararagraph of Sec. 17, RA 9851 is simply permissive on the part ofthe Philippine State.1avvphi1Besides, even granting that the surrender of a person is mandatorily required when the Philippines does not exercise its primary jurisdiction in cases where "another court or internationaltribunal is already conducting the investigation or undertaking the prosecution of such crime," still, the tenor of the Agreement is not repugnant to Sec. 17 of RA 9851. Said legal proviso aptlyprovides that the surrender may be made "to another State pursuant to the applicable extradition laws and treaties." The Agreement can already be considered a treaty following this Courtsdecision in Nicolas v. Romulo74 which cited Weinberger v. Rossi.75 In Nicolas, We held that "an executive agreement is a treaty within the meaning of that word in international law andconstitutes enforceable domestic law vis--vis the United States."76Likewise, the Philippines and the US already have an existing extradition treaty, i.e., RP-US Extradition Treaty, which was executed on November 13, 1994. The pertinent Philippine law, on theother hand, is Presidential Decree No. 1069, issued on January 13, 1977. Thus, the Agreement, in conjunction with the RP-US Extradition Treaty, would neither violate nor run counter to Sec.17 of RA 9851.The views reliance on Suplico v. Neda77 is similarly improper. In that case, several petitions were filed questioning the power of the President to enter into foreign loan agreements. However,before the petitions could be resolved by the Court, the Office of the Solicitor General filed a Manifestation and Motion averring that the Philippine Government decided not to continue with theZTE National Broadband Network Project, thus rendering the petition moot. In resolving the case, the Court took judicial notice of the act of the executive department of the Philippines (thePresident) and found the petition to be indeed moot. Accordingly, it dismissed the petitions.In his dissent in the abovementioned case, Justice Carpio discussed the legal implications of an executive agreement. He stated that "an executive agreement has the force and effect of law xx x [it] cannot amend or repeal prior laws." 78 Hence, this argument finds no application in this case seeing as RA 9851 is a subsequent law, not a prior one. Notably, this argument cannot befound in the ratio decidendi of the case, but only in the dissenting opinion.The view further contends that the RP-US Extradition Treaty is inapplicable to RA 9851 for the reason that under par. 1, Art. 2 of the RP-US Extradition Treaty, "[a]n offense shall be anextraditable offense if it is punishable under the laws in both Contracting Parties x x x," 79 and thereby concluding that while the Philippines has criminalized under RA 9851 the acts defined inthe Rome Statute as war crimes, genocide and other crimes against humanity, there is no similar legislation in the US. It is further argued that, citing U.S. v. Coolidge, in the US, a personcannot be tried in the federal courts for an international crime unless Congress adopts a law defining and punishing the offense.This view must fail.On the contrary, the US has already enacted legislation punishing the high crimes mentioned earlier. In fact, as early as October 2006, the US enacted a law criminalizing war crimes. Section2441, Chapter 118, Part I, Title 18 of the United States Code Annotated (USCA) provides for the criminal offense of "war crimes" which is similar to the war crimes found in both the RomeStatute and RA 9851, thus:(a) Offense Whoever, whether inside or outside the United States, commits a war crime, in any of the circumstances described in subsection (b), shall be fined under this title orimprisoned for life or any term of years, or both, and if death results to the victim, shall also be subject to the penalty of death.(b) Circumstances The circumstances referred to in subsection (a) are that the person committing such war crime or the victim of such war crime is a member of the ArmedForces of the United States or a national of the United States (as defined in Section 101 of the Immigration and Nationality Act).(c) Definition As used in this Section the term "war crime" means any conduct (1) Defined as a grave breach in any of the international conventions signed at Geneva 12 August 1949, or any protocol to such convention to which the United Statesis a party;(2) Prohibited by Article 23, 25, 27 or 28 of the Annex to the Hague Convention IV, Respecting the Laws and Customs of War on Land, signed 18 October 1907;(3) Which constitutes a grave breach of common Article 3 (as defined in subsection [d]) when committed in the context of and in association with an armed conflict notof an international character; or(4) Of a person who, in relation to an armed conflict and contrary to the provisions of the Protocol on Prohibitions or Restrictions on the Use of Mines, Booby-Trapsand Other Devices as amended at Geneva on 3 May 1996 (Protocol II as amended on 3 May 1996), when the United States is a party to such Protocol, willfully kills orcauses serious injury to civilians.801avvphi1Similarly, in December 2009, the US adopted a law that criminalized genocide, to wit:1091. Genocide(a) Basic Offense Whoever, whether in the time of peace or in time of war and with specific intent to destroy, in whole or in substantial part, a national, ethnic, racial or religiousgroup as such(1) kills members of that group;(2) causes serious bodily injury to members of that group;(3) causes the permanent impairment of the mental faculties of members of the group through drugs, torture, or similar techniques;(4) subjects the group to conditions of life that are intended to cause the physical destruction of the group in whole or in part;(5) imposes measures intended to prevent births within the group; or(6) transfers by force children of the group to another group;shall be punished as provided in subsection (b).81Arguing further, another view has been advanced that the current US laws do not cover every crime listed within the jurisdiction of the ICC and that there is a gap between the definitions of thedifferent crimes under the US laws versus the Rome Statute. The view used a report written by Victoria K. Holt and Elisabeth W. Dallas, entitled "On Trial: The US Military and the InternationalCriminal Court," as its basis.At the outset, it should be pointed out that the report used may not have any weight or value under international law. Article 38 of the Statute of the International Court of Justice (ICJ) lists thesources of international law, as follows: (1) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; (2) international custom,as evidence of a general practice accepted as law; (3) the general principles of law recognized by civilized nations; and (4) subject to the provisions of Article 59, judicial decisions and theteachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law. The report does not fall under any of the foregoing enumeratedsources. It cannot even be considered as the "teachings of highly qualified publicists." A highly qualified publicist is a scholar of public international law and the term usually refers to legalscholars or "academic writers."82 It has not been shown that the authors83 of this report are highly qualified publicists.Assuming arguendo that the report has weight, still, the perceived gaps in the definitions of the crimes are nonexistent. To highlight, the table below shows the definitions of genocide and warcrimes under the Rome Statute vis--vis the definitions under US laws:

Rome StatuteArticleGenocide

US Law6 1091. Genocide

For the purpose of this Statute, "genocide" means any of the followingacts committed with intent to destroy, in whole or in part, a national,ethnical, racial or religious group, as such:(a) Killing members of the group;

(a) Basic Offense Whoever, whether in the time of peace or in time of war andwith specific intent to destroy, in whole or in substantial part, a national, ethnic,racial or religious group as such(1) kills members of that group;(2) causes serious bodily injury to members of that group;

(b) Causing serious bodily or mental harm to members of the

group;(c) Deliberately inflicting on the group conditions of life calculated tobring about its physical destruction in whole or in part;(d) Imposing measures intended to prevent births within the group;(e) Forcibly transferring children of the group to another group.

(3) causes the permanent impairment of the mental faculties of members of

the group through drugs, torture, or similar techniques;(4) subjects the group to conditions of life that are intended to cause thephysical destruction of the group in whole or in part;(5) imposes measures intended to prevent births within the group; or(6) transfers by force children of the group to another group;shall be punished as provided in subsection (b).

ArticleWar Crimes

2. For the purpose of this Statute, "war crimes" means:

(a) Grave breaches of the Geneva Conventions of 12 August 1949,namely, any of the following acts against persons or propertyprotected under the provisions of the relevant Geneva Convention: xx x84(b) Other serious violations of the laws and customs applicable ininternational armed conflict, within the established framework ofinternational law, namely, any of the following acts:xxxx(c) In the case of an armed conflict not of an international character,serious violations of article 3 common to the four GenevaConventions of 12 August 1949, namely, any of the following actscommitted against persons taking no active part in the hostilities,including members of armed forces who have laid down their armsand those placed hors de combat by sickness, wounds, detention orany other cause:

(d) Definition As used in this Section the term "war crime" means any conduct

(1) Defined as a grave breach in any of the international conventions signed at

Geneva 12 August 1949, or any protocol to such convention to which theUnited States is a party;(2) Prohibited by Article 23, 25, 27 or 28 of the Annex to the Hague ConventionIV, Respecting the Laws and Customs of War on Land, signed 18 October1907;(3) Which constitutes a grave breach of common Article 3 (as defined insubsection [d]85) when committed in the context of and in association with anarmed conflict not of an international character; or(4) Of a person who, in relation to an armed conflict and contrary to theprovisions of the Protocol on Prohibitions or Restrictions on the Use of Mines,Booby-Traps and Other Devices as amended at Geneva on 3 May 1996(Protocol II as amended on 3 May 1996), when the United States is a party tosuch Protocol, willfully kills or causes serious injury to civilians.86

xxxx(d) Paragraph 2 (c) applies to armed conflicts not of an internationalcharacter and thus does not apply to situations of internaldisturbances and tensions, such as riots, isolated and sporadic actsof violence or other acts of a similar nature.(e) Other serious violations of the laws and customs applicable inarmed conflicts not of an international character, within theestablished framework of international law, namely, any of thefollowing acts: x x x.Evidently, the gaps pointed out as to the definition of the crimes are not present. In fact, the report itself stated as much, to wit:Few believed there were wide differences between the crimes under the jurisdiction of the Court and crimes within the Uniform Code of Military Justice that would expose US personnel to theCourt. Since US military lawyers were instrumental in drafting the elements of crimes outlined in the Rome Statute, they ensured that most of the crimes were consistent with those outlined inthe UCMJ and gave strength to complementarity for the US. Small areas of potential gaps between the UCMJ and the Rome Statute, military experts argued, could be addressed throughexisting military laws.87 x x xThe report went on further to say that "[a]ccording to those involved, the elements of crimes laid out in the Rome Statute have been part of US military doctrine for decades." 88 Thus, theargument proffered cannot stand.Nonetheless, despite the lack of actual domestic legislation, the US notably follows the doctrine of incorporation. As early as 1900, the esteemed Justice Gray in The Paquete Habana 89 casealready held international law as part of the law of the US, to wit:International law is part of our law, and must be ascertained and administered by the courts of justice of appropriate jurisdiction as often as questions of right depending upon it are dulypresented for their determination. For this purpose, where there is no treaty and no controlling executive or legislative act or judicial decision, resort must be had to the customs and usages ofcivilized nations, and, as evidence of these, to the works of jurists and commentators who by years of labor, research, and experience have made themselves peculiarly well acquainted withthe subjects of which they treat. Such works are resorted to by judicial tribunals, not for the speculations of their authors concerning what the law ought to be, but for the trustworthy evidenceof what the law really is.90(Emphasis supplied.)Thus, a person can be tried in the US for an international crime despite the lack of domestic legislation. The cited ruling in U.S. v. Coolidge, 91 which in turn is based on the holding in U.S. v.Hudson,92 only applies to common law and not to the law of nations or international law. 93 Indeed, the Court in U.S. v. Hudson only considered the question, "whether the Circuit Courts of theUnited States can exercise a common law jurisdiction in criminal cases."94 Stated otherwise, there is no common law crime in the US but this is considerably different from international law.The US doubtless recognizes international law as part of the law of the land, necessarily including international crimes, even without any local statute. 95 In fact, years later, US courts wouldapply international law as a source of criminal liability despite the lack of a local statute criminalizing it as such. So it was that in Ex Parte Quirin 96 the US Supreme Court noted that "[f]rom thevery beginning of its history this Court has recognized and applied the law of war as including that part of the law of nations which prescribes, for the conduct of war, the status, rights and

duties of enemy nations as well as of enemy individuals." 97 It went on further to explain that Congress had not undertaken the task of codifying the specific offenses covered in the law of war,thus:It is no objection that Congress in providing for the trial of such offenses has not itself undertaken to codify that branch of international law or to mark its precise boundaries, or to enumerate ordefine by statute all the acts which that law condemns. An Act of Congress punishing the crime of piracy as defined by the law of nations is an appropriate exercise of its constitutionalauthority, Art. I, s 8, cl. 10, to define and punish the offense since it has adopted by reference the sufficiently precise definition of international law. x x x Similarly by the reference in the 15thArticle of War to offenders or offenses that x x x by the law of war may be triable by such military commissions. Congress has incorporated by reference, as within the jurisdiction of militarycommissions, all offenses which are defined as such by the law of war x x x, and which may constitutionally be included within that jurisdiction. 98 x x x (Emphasis supplied.)This rule finds an even stronger hold in the case of crimes against humanity. It has been held that genocide, war crimes and crimes against humanity have attained the status of customaryinternational law. Some even go so far as to state that these crimes have attained the status of jus cogens.99Customary international law or international custom is a source of international law as stated in the Statute of the ICJ. 100 It is defined as the "general and consistent practice of statesrecognized and followed by them from a sense of legal obligation." 101 In order to establish the customary status of a particular norm, two elements must concur: State practice, the objectiveelement; and opinio juris sive necessitates, the subjective element.102State practice refers to the continuous repetition of the same or similar kind of acts or norms by States. 103 It is demonstrated upon the existence of the following elements: (1) generality; (2)uniformity and consistency; and (3) duration.104 While, opinio juris, the psychological element, requires that the state practice or norm "be carried out in such a way, as to be evidence of a beliefthat this practice is rendered obligatory by the existence of a rule of law requiring it."105"The term jus cogens means the compelling law." 106 Corollary, "a jus cogens norm holds the highest hierarchical position among all other customary norms and principles." 107 As a result, juscogens norms are deemed "peremptory and non-derogable." 108 When applied to international crimes, "jus cogens crimes have been deemed so fundamental to the existence of a justinternational legal order that states cannot derogate from them, even by agreement."109These jus cogens crimes relate to the principle of universal jurisdiction, i.e., "any state may exercise jurisdiction over an individual who commits certain heinous and widely condemnedoffenses, even when no other recognized basis for jurisdiction exists." 110 "The rationale behind this principle is that the crime committed is so egregious that it is considered to be committedagainst all members of the international community"111 and thus granting every State jurisdiction over the crime.112Therefore, even with the current lack of domestic legislation on the part of the US, it still has both the doctrine of incorporation and universal jurisdiction to try these crimes.Consequently, no matter how hard one insists, the ICC, as an international tribunal, found in the Rome Statute is not declaratory of customary international law.The first element of customary international law, i.e., "established, widespread, and consistent practice on the part of States," 113 does not, under the premises, appear to be obtaining asreflected in this simple reality: As of October 12, 2010, only 114114 States have ratified the Rome Statute, subsequent to its coming into force eight (8) years earlier, or on July 1, 2002. The factthat 114 States out of a total of 194 115 countries in the world, or roughly 58.76%, have ratified the Rome Statute casts doubt on whether or not the perceived principles contained in the Statutehave attained the status of customary law and should be deemed as obligatory international law. The numbers even tend to argue against the urgency of establishing international criminalcourts envisioned in the Rome Statute. Lest it be overlooked, the Philippines, judging by the action or inaction of its top officials, does not even feel bound by the Rome Statute. Res ipsaloquitur. More than eight (8) years have elapsed since the Philippine representative signed the Statute, but the treaty has not been transmitted to the Senate for the ratification process.And this brings us to what Fr. Bernas, S.J. aptly said respecting the application of the concurring elements, thus:Custom or customary international law means "a general and consistent practice of states followed by them from a sense of legal obligation [ opinio juris] x x x." This statement contains the twobasic elements of custom: the material factor, that is how the states behave, and the psychological factor or subjective factor, that is, why they behave the way they do.xxxxThe initial factor for determining the existence of custom is the actual behavior of states. This includes several elements: duration, consistency, and generality of the practice of states.The required duration can be either short or long. x x xxxxxDuration therefore is not the most important element. More important is the consistency and the generality of the practice. x x xxxxxOnce the existence of state practice has been established, it becomes necessary to determine why states behave the way they do. Do states behave the way they do because theyconsider it obligatory to behave thus or do they do it only as a matter of courtesy? Opinio juris, or the belief that a certain form of behavior is obligatory, is what makes practice an internationalrule. Without it, practice is not law.116 (Emphasis added.)Evidently, there is, as yet, no overwhelming consensus, let alone prevalent practice, among the different countries in the world that the prosecution of internationally recognized crimes ofgenocide, etc. should be handled by a particular international criminal court.Absent the widespread/consistent-practice-of-states factor, the second or the psychological element must be deemed non-existent, for an inquiry on why states behave the way they dopresupposes, in the first place, that they are actually behaving, as a matter of settled and consistent practice, in a certain manner. This implicitly requires belief that the practice in question isrendered obligatory by the existence of a rule of law requiring it.117Like the first element, the second element has likewise not been shown to be present.Further, the Rome Statute itself rejects the concept of universal jurisdiction over the crimes enumerated therein as evidenced by it requiring State consent. 118 Even further, the Rome Statutespecifically and unequivocally requires that: "This Statute is subject to ratification, acceptance or approval by signatory States." 119 These clearly negate the argument that such has alreadyattained customary status.More importantly, an act of the executive branch with a foreign government must be afforded great respect. The power to enter into executive agreements has long been recognized to belodged with the President. As We held in Neri v. Senate Committee on Accountability of Public Officers and Investigations, "[t]he power to enter into an executive agreement is in essence anexecutive power. This authority of the President to enter into executive agreements without the concurrence of the Legislature has traditionally been recognized in Philippinejurisprudence."120 The rationale behind this principle is the inviolable doctrine of separation of powers among the legislative, executive and judicial branches of the government. Thus, absentany clear contravention of the law, courts should exercise utmost caution in declaring any executive agreement invalid.In light of the above consideration, the position or view that the challenged RP-US Non-Surrender Agreement ought to be in the form of a treaty, to be effective, has to be rejected.WHEREFORE, the petition for certiorari, mandamus and prohibition is hereby DISMISSED for lack of merit. No costs.SO ORDERED.PRESBITERO J. VELASCO, JR.Associate Justice

G.R. No. 185572 February 7, 2012

CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP), Petitioner,vs.HON. CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145, Regional Trial Court of Makati City, HERMINIO HARRY L. ROQUE, JR., JOEL R.BUTUYAN, ROGER R. RAYEL, ROMEL R. BAGARES, CHRISTOPHER FRANCISCO C. BOLASTIG, LEAGUE OF URBAN POOR FOR ACTION (LUPA), KILUSAN NG MARALITA SAMEYCAUAYAN (KMM-LUPA CHAPTER), DANILO M. CALDERON, VICENTE C. ALBAN, MERLYN M. VAAL, LOLITA S. QUINONES, RICARDO D. LANOZO, JR., CONCHITA G. GOZO,MA. TERESA D. ZEPEDA, JOSEFINA A. LANOZO, and SERGIO C. LEGASPI, JR., KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY), EDY CLERIGO, RAMMIL DINGAL, NELSONB. TERRADO, CARMEN DEUNIDA, and EDUARDO LEGSON, Respondents.DECISIONSERENO, J.:This is a Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the 30 September 2008 Decision and 5December 2008 Resolution of the Court of Appeals (CA) in CAG.R. SP No. 103351.1On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum ofUnderstanding with the North Luzon Railways Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line fromManila to San Fernando, La Union (the Northrail Project).2On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU),wherein China agreed to extend Preferential Buyers Credit to the Philippine government to finance the Northrail Project. 3 The Chinese government designated EXIM Bank as the lender, whilethe Philippine government named the DOF as the borrower. 4 Under the Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in20 years, with a 5-year grace period, and at the rate of 3% per annum.5On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him ofCNMEGs designation as the Prime Contractor for the Northrail Project. 6On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on aturnkey basis (the Contract Agreement).7 The contract price for the Northrail Project was pegged at USD 421,050,000. 8On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). 9 In theLoan Agreement, EXIM Bank agreed to extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance the construction ofPhase I of the Northrail Project.10On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for Summary Hearing to Determine the Existence of Facts andCircumstances Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, theDepartment of Budget and Management, the National Economic Development Authority and Northrail. 11 The case was docketed as Civil Case No. 06-203 before the Regional Trial Court,National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void for beingcontrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise knownas the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative Code. 12RTC Br. 145 issued an Order dated 17 March 2006 setting the case for hearing on the issuance of injunctive reliefs. 13 On 29 March 2006, CNMEG filed an Urgent Motion for Reconsiderationof this Order.14 Before RTC Br. 145 could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have jurisdiction over (a) its person, as it wasan agent of the Chinese government, making it immune from suit, and (b) the subject matter, as the Northrail Project was a product of an executive agreement. 15On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the case for summary hearing to determine whether the injunctive reliefs prayed forshould be issued.16 CNMEG then filed a Motion for Reconsideration, 17 which was denied by the trial court in an Order dated 10 March 2008. 18Thus, CNMEG filed before the CA a Petition forCertiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.19In the assailed Decision dated 30 September 2008, the appellate court dismissed the Petition for Certiorari. 20Subsequently, CNMEG filed a Motion for Reconsideration, 21 which was denied bythe CA in a Resolution dated 5 December 2008.22 Thus, CNMEG filed the instant Petition for Review on Certiorari dated 21 January 2009, raising the following issues: 23Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China.Whether or not the Northrail contracts are products of an executive agreement between two sovereign states.Whether or not the certification from the Department of Foreign Affairs is necessary under the foregoing circumstances.Whether or not the act being undertaken by petitioner CNMEG is an act jure imperii.Whether or not the Court of Appeals failed to avoid a procedural limbo in the lower court.Whether or not the Northrail Project is subject to competitive public bidding.

Whether or not the Court of Appeals ignored the ruling of this Honorable Court in the Neri case.CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145 for lack of jurisdiction. It likewise requests this Court for the issuance of a TRO and, later on, a writ of preliminaryinjunction to restrain public respondent from proceeding with the disposition of Civil Case No. 06-203.The crux of this case boils down to two main issues, namely:1. Whether CNMEG is entitled to immunity, precluding it from being sued before a local court.2. Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or before a local court.First issue: Whether CNMEG is entitled to immunityThis Court explained the doctrine of sovereign immunity in Holy See v. Rosario,24 to wit:There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, bemade a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts oracts jure imperii of a state, but not with regard to private acts or acts jure gestionis. (Emphasis supplied; citations omitted.)xxx

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The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This isparticularly true with respect to the Communist states which took control of nationalized business activities and international trading.In JUSMAG v. National Labor Relations Commission,25 this Court affirmed the Philippines adherence to the restrictive theory as follows:The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does not, per se, mean that sovereign states may, at alltimes, be sued in local courts. The complexity of relationships between sovereign states, brought about by their increasing commercial activities, mothered a more restrictive application of thedoctrine.xxx

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As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign or governmental activities ( jure imperii). The mantle of state immunity cannot beextended to commercial, private and proprietary acts (jure gestionis).26 (Emphasis supplied.)Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved whether the entity claiming immunity performs governmental, as opposed toproprietary, functions. As held in United States of America v. Ruiz 27The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs.Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into businesscontracts. It does not apply where the contract relates to the exercise of its sovereign functions. 28A. CNMEG is engaged in a proprietary activity.A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A thorough examination of the basic facts of the case would show thatCNMEG is engaged in a proprietary activity.The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:29WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos, section I, Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THEPROJECT);AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including design, manufacturing, supply, construction, commissioning, and training of the Employerspersonnel;AND WHEREAS the Loan Agreement of the Preferential Buyers Credit between Export-Import Bank of China and Department of Finance of Republic of the Philippines;NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the construction of the Luzon railways was meant to be a proprietary endeavor. In order tofully understand the intention behind and the purpose of the entire undertaking, the Contract Agreement must not be read in isolation. Instead, it must be construed in conjunction with threeother documents executed in relation to the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between Northrail and CNMEG; 30 (b) the letter of Amb.Wang dated 1 October 2003 addressed to Sec. Camacho;31 and (c) the Loan Agreement.32

1. Memorandum of Understanding dated 14 September 2002

The Memorandum of Understanding dated 14 September 2002 shows that CNMEG sought the construction of the Luzon Railways as a proprietary venture. The relevant parts thereof read:WHEREAS, CNMEG has the financial capability, professional competence and technical expertise to assess the state of the [Main Line North (MLN)] and recommend implementation plans aswell as undertake its rehabilitation and/or modernization;WHEREAS, CNMEG has expressed interest in the rehabilitation and/or modernization of the MLN from Metro Manila to San Fernando, La Union passing through the provinces of Bulacan,Pampanga, Tarlac, Pangasinan and La Union (the Project);WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to undertake a Feasibility Study (the "Study") at no cost to NORTHRAIL CORP.;WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in undertaking the Project with Suppliers Credit and intends to employ CNMEG as the Contractor for the Projectsubject to compliance with Philippine and Chinese laws, rules and regulations for the selection of a contractor;WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal advantageous to the Government of the Republic of the Philippines and has therefore agreed to assist CNMEG in theconduct of the aforesaid Study;xxx

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II. APPROVAL PROCESS

2.1 As soon as possible after completion and presentation of the Study in accordance with Paragraphs 1.3 and 1.4 above and in compliance with necessary governmental laws, rules,regulations and procedures required from both parties, the parties shall commence the preparation and negotiation of the terms and conditions of the Contract (the "Contract") to be enteredinto between them on the implementation of the Project. The parties shall use their best endeavors to formulate and finalize a Contract with a view to signing the Contract within one hundredtwenty (120) days from CNMEGs presentation of the Study.33 (Emphasis supplied)Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was conducted not because of any diplomatic gratuity from or exercise ofsovereign functions by the Chinese government, but was plainly a business strategy employed by CNMEG with a view to securing this commercial enterprise.2. Letter dated 1 October 2003That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in his letter dated 1 October 2003, thus:1. CNMEG has the proven competence and capability to undertake the Project as evidenced by the ranking of 42 given by the ENR among 225 global construction companies.2. CNMEG already signed an MOU with the North Luzon Railways Corporation last September 14, 2000 during the visit of Chairman Li Peng. Such being the case, they havealready established an initial working relationship with your North Luzon Railways Corporation. This would categorize CNMEG as the state corporation within the PeoplesRepublic of China which initiated our Governments involvement in the Project.3. Among the various state corporations of the Peoples Republic of China, only CNMEG has the advantage of being fully familiar with the current requirements of the NorthrailProject having already accomplished a Feasibility Study which was used as inputs by the North Luzon Railways Corporation in the approvals (sic) process required by theRepublic of the Philippines.34 (Emphasis supplied.)Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a global construction company. The implementation of the Northrail Projectwas intended to generate profit for CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000 for the venture. 35 The use of the term "state corporation" to refer toCNMEG was only descriptive of its nature as a government-owned and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf ofChina in the performance of the latters sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese corporations owned by the state would be automaticallyconsidered as performing governmental activities, even if they are clearly engaged in commercial or proprietary pursuits.3. The Loan AgreementCNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was signed by the Philippine and Chinese governments, and its assignment as thePrimary Contractor meant that it was bound to perform a governmental function on behalf of China. However, the Loan Agreement, which originated from the same Aug 30 MOU, belies thisreasoning, viz:Article 11. xxx (j) Commercial Activity The execution and delivery of this Agreement by the Borrower constitute, and the Borrowers performance of and compliance with its obligations underthis Agreement will constitute,private and commercial acts done and performed for commercial purposes under the laws of the Republic of the Philippines and neither the Borrowernor any of its assets is entitled to any immunity or privilege (sovereign or otherwise) from suit, execution or any other legal process with respect to its obligations under thisAgreement, as the case may be, in any jurisdiction. Notwithstanding the foregoing, the Borrower does not waive any immunity with respect of its assets which are (i) used by a diplomaticor consular mission of the Borrower and (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to publicor governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use). (Emphasis supplied.)(k) Proceedings to Enforce Agreement In any proceeding in the Republic of the Philippines to enforce this Agreement, the choice of the laws of the Peoples Republic of China as the governinglaw hereof will be recognized and such law will be applied. The waiver of immunity by the Borrower, the irrevocable submissions of the Borrower to the non-exclusive jurisdiction of the courtsof the Peoples Republic of China and the appointment of the Borrowers Chinese Process Agent is legal, valid, binding and enforceable and any judgment obtained in the Peoples Republic of

China will be if introduced, evidence for enforcement in any proceedings against the Borrower and its assets in the Republic of the Philippines provided that (a) the court rendering judgmenthad jurisdiction over the subject matter of the action in accordance with its jurisdictional rules, (b) the Republic had notice of the proceedings, (c) the judgment of the court was not obtainedthrough collusion or fraud, and (d) such judgment was not based on a clear mistake of fact or law.36Further, the Loan Agreement likewise contains this express waiver of immunity:15.5 Waiver of Immunity The Borrower irrevocably and unconditionally waives, any immunity to which it or its property may at any time be or become entitled, whether characterized assovereign immunity or otherwise, from any suit, judgment, service of process upon it or any agent, execution on judgment, set-off, attachment prior to judgment, attachment in aid of executionto which it or its assets may be entitled in any legal action or proceedings with respect to this Agreement or any of the transactions contemplated hereby or hereunder. Notwithstanding theforegoing, the Borrower does not waive any immunity in respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower, (ii) assets of a military character and undercontrol of a military authority or defense agency and (iii) located in the Philippines and dedicated to a public or governmental use (as distinguished from patrimonial assets or assets dedicatedto commercial use).37Thus, despite petitioners claim that the EXIM Bank extended financial assistance to Northrail because the bank was mandated by the Chinese government, and not because of any motivationto do business in the Philippines,38 it is clear from the foregoing provisions that the Northrail Project was a purely commercial transaction.Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the Contract Agreement was between Northrail and CNMEG. Although theContract Agreement is silent on the classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of the entire undertaking,nonetheless reveal the intention of the parties to the Northrail Project to classify the whole venture as commercial or proprietary in character.Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter dated 1 October 2003, and theLoan Agreement would reveal the desire of CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its business.B. CNMEG failed to adduce evidence that it is immune from suit under Chinese law.Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. This view finds support in Malong v. Philippine NationalRailways, in which this Court held that "(i)mmunity from suit is determined by the character of the objects for which the entity was organized." 39In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische Zusammenarbeit (GTZ) v. CA 40 must be examined. In Deutsche Gesellschaft, Germany and the Philippines enteredinto a Technical Cooperation Agreement, pursuant to which both signed an arrangement promoting the Social Health InsuranceNetworking and Empowerment (SHINE) project. The twogovernments named their respective implementing organizations: the Department of Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for the Philippines, and GTZ for theimplementation of Germanys contributions. In ruling that GTZ was not immune from suit, this Court held:The arguments raised by GTZ and the [Office of the Solicitor General (OSG)] are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateralagreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. Theactivities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in the Philippines. The fact that GTZ enteredinto employment contracts with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr., which set forth what remainsvalid doctrine:Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether theforeign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be testedby its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.Beyond dispute is the tenability of the comment points (sic) raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particularemployment contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy the Federal Republics immunity fromsuit?The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that "the State may not be sued withoutits consent." Who or what consists of "the State"? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State, necessary as it is toavoid "unduly vexing the peace of nations."If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whethersaid State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality ofGTZ.Counsel for GTZ characterizes GTZ as "the implementing agency of the Government of the Federal Republic of Germany," a depiction similarly adopted by the OSG. Assuming thatthe characterization is correct,it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated orunincorporated.xxx

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State immunity from suit may be waived by general or special law. The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is repletewith examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued.xxx

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It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as theimplementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which grants the corporation the power "to sue and be sued incourt." Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, (sic) governmental innature as (sic) they may be.Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is"the implementing agency of the Government of the Federal Republic of Germany." On the other hand, private respondents asserted before the Labor Arbiter that GTZ was "a privatecorporation engaged in the implementation of development projects." The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss, though he was silent on that point in hisDecision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation "was never controverted, and is therefore deemed admitted." In itsReply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the "implementing agency," and not that of a private corporation.In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a "private corporation," and the Labor Arbiter acted rashly in accepting such claimwithout explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare descriptive "implementing agency." There is no doubt that the 1991Agreement designated GTZ as the "implementing agency" in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to ourconcerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as "implementing agency" could takeus. The term by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridicalpersonality independent of the German government or none at all.xxx

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Again, we are uncertain of the corresponding legal implications under German law surrounding "a private company owned by the Federal Republic of Germany." Yet taking thedescription on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government,or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the Corporate Code states that "[e]very corporation incorporatedunder this Code has the power and capacity x x x to sue and be sued in its corporate name."It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or besued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the FederalRepublic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of thePhilippines, and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtueof the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume thatGTZ enjoys immunity from suit.41(Emphasis supplied.)Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit, even if it contends that it performs governmental functions. Its designationas the Primary Contractor does not automatically grant it immunity, just as the term "implementing agency" has no precise definition for purposes of ascertaining whether GTZ was immunefrom suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, following this Courtsruling in Deutsche Gesellschaft, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As aresult, it has the capacity to sue and be sued under Section 36 of the Corporation Code.C. CNMEG failed to present a certification from the Department of Foreign Affairs.In Holy See,42 this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question conclusiveupon the courts, to wit:In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is suedto convey to the court that said defendant is entitled to immunity.xxx

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In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But howthe Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairsjust sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In WorldHealth Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy askedthe Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" torespondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the saidDepartment to file its memorandum in support of petitioners claim of sovereign immunity.In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945];Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypassthe Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. 43 (Emphasis supplied.)The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which may be considered as conclusive upon the courts. This Court, inDepartment of Foreign Affairs (DFA) v. National Labor Relations Commission (NLRC), 44 emphasized the DFAs competence and authority to provide such necessary determination, to wit:The DFAs function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenge, (sic) entitles itto seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable itto help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise

accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally of (sic) the DFA as being the highest executive department with thecompetence and authority to so act in this aspect of the international arena.45 (Emphasis supplied.)Further, the fact that this authority is exclusive to the DFA was also emphasized in this Courts ruling in Deutsche Gesellschaft:It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs "a certification of respondentsdiplomatic status and entitlement to diplomatic privileges including immunity from suits." The requirement might not necessarily be imperative. However, had GTZ obtained such certificationfrom the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immunewhich the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes ofthis case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture, we do not see anyevidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It may be possible that GTZ tried, but failed tosecure such certification, due to the same concerns that we have discussed herein.Would the fact that the Solicitor General has endorsed GTZs claim of States immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in publicinternational law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of ForeignAffairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue. The arguments raised by theOSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippine government on the issue. The Commentfiled by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited.46 (Emphasis supplied.)In the case at bar, CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of the Peoples Republic of China, stating that the Northrail Project is inpursuit of a sovereign activity.47Surely, this is not the kind of certification that can establish CNMEGs entitlement to immunity from suit, as Holy See unequivocally refers to the determination ofthe "Foreign Office of the state where it is sued."Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must berespected by the courts. However, as expressly enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree ofconfidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of suchcertification.D. An agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit.In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In the said law, the agreement to submit disputes to arbitration in aforeign country is construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning behind the waiver in thiscase.The Conditions of Contract,48 which is an integral part of the Contract Agreement,49 states:33. SETTLEMENT OF DISPUTES AND ARBITRATION33.1. Amicable SettlementBoth parties shall attempt to amicably settle all disputes or controversies arising from this Contract before the commencement of arbitration.33.2. ArbitrationAll disputes or controversies arising from this Contract which cannot be settled between the Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRALArbitration Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall be Hong Kong International Arbitration Center. The place of arbitrationshall be in Hong Kong at Hong Kong International Arbitration Center (HKIAC).Under the above provisions, if any dispute arises between Northrail and CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitralaward in favor of Northrail, its enforcement in the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13 thereof provides for theRecognition and Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules, the party to arbitration wishing to have an arbitral award recognized and enforced inthe Philippines must petition the proper regional trial court (a) where the assets to be attached or levied upon is located; (b) where the acts to be enjoined are being performed; (c) in theprincipal place of business in the Philippines of any of the parties; (d) if any of the parties is an individual, where any of those individuals resides; or (e) in the National Capital Judicial Region.From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of theContract Agreement.Second issue: Whether the Contract Agreement is an executive agreementArticle 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty as follows:[A]n international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments andwhatever its particular designation.In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b) is usually less formal; and(c) deals with a narrower range of subject matters.50

Despite these differences, to be considered an executive agreement, the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement mustbe between states; (b) it must be written; and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar.A. CNMEG is neither a government nor a government agency.The Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG. 51 By the terms of the Contract Agreement, Northrail is a governmentowned or -controlled corporation, while CNMEG is a corporation duly organized and created under the laws of the Peoples Republic of China. 52Thus, both Northrail and CNMEG entered intothe Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively.Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact that Amb. Wang, in his letter dated 1 October 2003, 53 described CNMEG as a"state corporation" and declared its designation as the Primary Contractor in the Northrail Project did not mean it was to perform sovereign functions on behalf of China. That label was onlydescriptive of its nature as a state-owned corporation, and did not preclude it from engaging in purely commercial or proprietary ventures.B. The Contract Agreement is to be governed by Philippine law.Article 2 of the Conditions of Contract,54 which under Article 1.1 of the Contract Agreement is an integral part of the latter, states:APPLICABLE LAW AND GOVERNING LANGUAGEThe contract shall in all respects be read and construed in accordance with the laws of the Philippines.The contract shall be written in English language. All correspondence and other documents pertaining to the Contract which are exchanged by the parties shall be written in English language.Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations thereunder are not governed byinternational law.It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an executive agreement. It is merely an ordinary commercial contract that can bequestioned before the local courts.WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and the Contract Agreement is not anexecutive agreement. CNMEGs prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic. This case is REMANDED to the Regional TrialCourt of Makati, Branch 145, for further proceedings as regards the validity of the contracts subject of Civil Case No. 06-203.No pronouncement on costs of suit.SO ORDERED.MARIA LOURDES P. A. SERENO

FISHERIES JURISDICTION CASE (UNITED KINGDOM v. ICELAND) (MERITS)

Judgment of 25 July 1974

In its Judgment on the merits in the case concerning Fisheries Jurisdiction (United Kingdom v. Iceland), the Court, by ten votes to four:(1) found that the Icelandic Regulations of 1972 constituting a unilateral extension of the exclusive fishing rights of Iceland to 50 nautical miles from the baselines are not opposable to theUnited Kingdom;(2) found that Iceland is not entitled unilaterally to exclude United Kingdom fishing vessels from areas between the 12-mile and 50-mile limits, or unilaterally to impose restrictions on theiractivities in such areas;(3) held that Iceland and the United Kingdom are under mutual obligations to undertake negotiations in good faith for an equitable solution of their differences;(4) indicated certain factors which are to be taken into account in these negotiations (preferential rights of Iceland, established rights of the United Kingdom, interests of other States,conservation of fishery resources, joint examination of measures required).The Court was composed as follows: President Lachs, Judges Forster, Gros, Bengzon, Petrn, Onyeama, Dillard, Ignacio-Pinto, de Castro, Morozov, Jimnz de Archaga, SirHumphrey Waldock, Nagendra Singh and Ruda.Among the ten Members of the Court who voted in favour of the Judgment, the President and Judge Nagendra Singh appended declarations; Judges Forster, Bengzon, Jim nez deArchaga, Nagendra Singh (already mentioned) and Ruda appended a joint separate opinion, and Judges Dillard, de Castro and Sir Humphrey Waldock appended separate opinions.Of the four judges who voted against the Judgment, Judge Ignacio-Pinto appended a declaration and Judges Gros, Petrn and Onyeama appended dissenting opinions.In these declarations and opinions the judges concerned make clear and explain their decisions.Procedure - Failure of Party to Appear (paras. 1-18 of the Judgment)In its Judgment, the Court recalls that proceedings were instituted by the United Kingdom against Iceland on 14 April 1972. At the request of the United Kingdom, the Court indicated interimmeasures of protection by an Order dated 17 August 1972 and confirmed them by a further Order dated 12 July 1972. By a Judgment of 2 February 1973 the Court found that it had jurisdictionto deal with the merits of the dispute.In its final submissions, the United Kingdom asked the Court to adjudge and declare:(a) that the claim by Iceland to be entitled to a zone of exclusive fisheries jurisdiction extending 50 nautical miles from the baselines is without foundation in international law and is invalid;(b) that, as against the United Kingdom, Iceland is not entitled unilaterally to assert an exclusive fisheries jurisdiction beyond the limit of 12 miles agreed to in an Exchange of Notes in 1961;(c) that Iceland is not entitled unilaterally to exclude British fishing vessels from the area of the high seas beyond the 12-mile limit or unilaterally to impose restrictions on their activities in thatarea;(d) that Iceland and the United Kingdom are under a duty to examine together, either bilaterally or with other interested States, the need on conservation grounds for the introduction ofrestrictions on fishing activities in the said area of the high seas and to negotiate for the establishment of such a rgime in that area as will inter alia ensure for Iceland a preferential positionconsistent with its position as a State specially dependent on its fisheries.Iceland did not take part in any phase of the proceedings. By a letter of 29 May 1972 Iceland informed the Court that it regarded the Exchange of Notes of 1961 as terminated; that in its viewthere was no basis under the Statute for the Court to exercise jurisdiction; and that, as it considered its vital interests to be involved, it was not willing to confer jurisdiction on the Court in anycase involving the extent of its fishery limits. In a letter dated 11 January 1974, Iceland stated that it did not accept any of the statements of fact or any of the allegations or contentions of lawsubmitted on behalf of the United Kingdom.The United Kingdom having referred to Article 53 of the Statute, the Court had to determine whether the claim was founded in fact and law. The facts requiring the Court's consideration inadjudicating upon the claim were attested by documentary evidence whose accuracy there appeared to be no reason to doubt. As for the law, although it was to be regretted that Iceland hadfailed to appear, the Court was nevertheless deemed to take notice of international law, which lay within its own judicial knowledge. Having taken account of the legal position of each Partyand acted with particular circumspection in view of the absence of the respondent State, the Court considered that it had before it the elements necessary to enable it to deliver judgment.History of the Dispute Jurisdiction of the Court (paras. 19-48 of the Judgment)The Court recalled that in 1948 the Althing (the Parliament of Iceland) had passed a law concerning the Scientific Conservation of the Continental Shelf Fisheries which empowered theGovernment to establish conservation zones wherein all fisheries should be subject to Icelandic rules and control to the extent compatible with agreements with other countries. Subsequentlythe 1901 Anglo-Danish Convention which had fixed a limit for Iceland's exclusive right of fishery round its coasts was denounced by Iceland as from 1951, new Icelandic Regulations of 1958proclaimed a 12-mile limit and the Althing declared by a resolution in 1959 "that recognition should be obtained of Iceland's right to the entire continental shelf area in conformity with the policyadopted by the Law of 1948". Following a number of incidents and a series of negotiations, Iceland and the United Kingdom agreed on an Exchange of Notes which took place on 11 March1961 and specified inter alia that the United Kingdom would no longer object to a 12-mile fishery zone, that Iceland would continue to work for the implementation of the 1959 resolution

regarding the extension of fisheries jurisdiction but would give the United Kingdom six months' notice of such extension and that "in case of a dispute in relation to such extension, the mattershall, at the request of either Party, be referred to the International Court of Justice".In 1971, the Icelandic Government announced that the agreement on fisheries jurisdiction with the United Kingdom would be terminated and that the limit of exclusive Icelandic fisheriesjurisdiction would be extended to 50 miles. In an aide-mmoire of 24 February 1972 the United Kingdom was formally notified of this intention. In reply the latter emphasized that theExchange of Notes was not open to unilateral denunciation and that in its view the measure contemplated "would have no basis in international law". On 14 July 1972 new Regulations wereintroduced whereby Iceland's fishery limits would be extended to 50 miles as from 1 September 1972 and all fishing activities by foreign vessels inside those limits be prohibited. Theirenforcement gave rise, while proceedings before the Court were continuing and Iceland was refusing to recognize the Court's decisions, to a series of incidents and negotiations whichresulted on 13 November 1973 in an exchange of Notes constituting an interim agreement between the United Kingdom and Iceland. This agreement, concluded for two years, provided fortemporary arrangements "pending a settlement of the substantive dispute and without prejudice to the legal position or rights of either Government in relation thereto".The Court considered that the existence of the interim agreement ought not to lead it to refrain from pronouncing judgment: it could not be said that the issues before the Court had becomewithout object, since the dispute still continued and, though it was beyond the powers of the Court to declare the law between the Parties as it might be at the date of expiration of the interimagreement, that could not relieve the Court from its obligation to render a judgment on the basis of the law as it now existed; furthermore, the Court ought not to discourage the making ofinterim arrangements in future disputes with the object of reducing friction.Reverting to the 1961 Exchange of Notes, which in the Court's Judgment of 1973 was held to be a treaty in force, the Court emphasized that it would be too narrow an interpretation of thecompromissory clause (quoted above) to conclude that it limited the Court's jurisdiction to giving an affirmative or a negative answer to the question of whether the Icelandic Regulations of1972 were in conformity with international law. It seemed evident that the dispute between the Parties included disagreements as to their respective rights in the fishery resources and theadequacy of measures to conserve them. It was within the power of the Court to take into consideration all relevant elementsApplicable Rules of International Law (paras. 49-78 of the Judgment)The first United Nations Conference on the Law of the Sea (Geneva, 1958) had adopted a Convention on the High Seas, Article 2 of which declared the principle of the freedom of the highseas, that is to say, freedom of navigation, freedom of fishing, etc., to "be exercised by all States with reasonable regard to the interests of other States in their exercise of the freedom of thehigh seas".The question of the breadth of the territorial sea and that of the extent of the coastal State's fishery jurisdiction had been left unsettled at the 1958 Conference and were not settled at a secondConference held in Geneva in 1960. However, arising out of the general consensus at that second Conference, two concepts had since crystallized as customary law: that of a fishery zone,between the territorial sea and the high seas within which the coastal State could claim exclusive fisheries jurisdiction - it now being generally accepted that that zone could extend to the 12mile limit - and the concept, in respect of waters adjacent to the zone of exclusive fishing rights, of preferential fishing rights in favour of the coastal State in a situation of special dependenceon its fisheries. The Court was aware that in recent years a number of States had asserted an extension of their exclusive fishery limits. The Court was likewise aware of present endeavours,pursued under the auspices of the United Nations, to achieve in a third Conference on the Law of the Sea the further codification and progressive development of that branch of the law, as itwas also of various proposals and preparatory documents produced in that framework. But, as a court of law, it could not render judgment sub specie legis ferendae or anticipate the lawbefore the legislator had laid it down. It must take into account the existing rules of international law and the Exchange of Notes of 1961.The concept of preferential fishing rights had originated in proposals submitted by Iceland at the Geneva Conference of 1958, which had confined itself to recommending that:". . . where, for the purpose of conservation, it becomes necessary to limit the total catch of a stock or stocks of fish in an area of the high seas adjacent to the territorial sea of a coastal State,any other States fishing in that area should collaborate with the coastal State to secure just treatment of such situation, by establishing agreed measures which shall recognize any preferentialrequirements of the coastal State resulting from its dependence upon the fishery concerned while having regard to the interests of the other States".At the 1960 Conference the same concept had been embodied in an amendment incorporated by a substantial vote into one of the proposals concerning the fishing zone. The contemporarypractice of States showed that that concept, in addition to its increasing and widespread acceptance, was being implemented by agreements, either bilateral or multilateral. In the presentcase, in which the exclusive fishery zone within the limit of 12 miles was not in dispute, the United Kingdom had expressly recognized the preferential rights of the other Party in the disputedwaters situated beyond that limit. There could be no doubt of the exceptional dependence of Iceland on its fisheries and the situation appeared to have been reached when it was imperative topreserve fish stocks in the interests of rational and economic exploitation.However, the very notion of preferential fishery rights for the coastal State in a situation of special dependence, though it implied a certain priority, could not imply the extinction of theconcurrent rights of other States. The fact that Iceland was entitled to claim preferential rights did not suffice to justify its claim unilaterally to exclude British fishing vessels from all fishingbeyond the limit of 12 miles agreed to in 1961.The United Kingdom had pointed out that its vessels had been fishing in Icelandic waters for centuries, that they had done so in a manner comparable with their present activities for upwardsof fifty years and that their exclusion would have very serious adverse consequences. There too the economic dependence and livelihood of whole communities were affected, and the UnitedKingdom shared the same interest in the conservation of fish stocks as Iceland, which had for its part admitted the existence of the Applicant's historic and special interests in fishing in thedisputed waters. Iceland's 1972 Regulations were therefore not opposable to the United Kingdom; they disregarded the established rights of that State and also the Exchange of Notes of1961, and they constituted an infringement of the principle (1958 Convention on the High Seas, Art. 2) of reasonable regard for the interests of other States, including the United Kingdom.In order to reach an equitable solution of the present dispute it was necessary that the preferential fishing rights of Iceland should be reconciled with the traditional fishing rights of the UnitedKingdom through the appraisal at any given moment of the relative dependence of either State on the fisheries in question, while taking into account the rights of other States and the needs ofconservation. Thus Iceland was not in law entitled unilaterally to exclude United Kingdom fishing vessels from areas to seaward of the limit of 12 miles agreed to in 1961 or unilaterally toimpose restrictions on their activities. But that did not mean that the United Kingdom was under no obligation to Iceland with respect to fishing in the disputed waters in the 12-mile to 50-milezone. Both Parties had the obligation to keep under review the fishery resources in those waters and to examine together, in the light of the information available, the measures required for theconservation and development, and equitable exploitation, of those resources, taking into account any international agreement that might at present be in force or might be reached afternegotiation.The most appropriate method for the solution of the dispute was clearly that of negotiation with a view to delimiting the rights and interests of the Parties and regulating equitably suchquestions as those of catch-limitation, share allocations and related restrictions. The obligation to negotiate flowed from the very nature of the respective rights of the Parties and corresponded

to the provisions of the United Nations Charter concerning peaceful settlement of disputes. The Court could not accept the view that the common intention of the Parties was to be releasedfrom negotiating throughout the whole period covered by the 1973 interim agreement. The task before them would be to conduct their negotiations on the basis that each must in good faithpay reasonable regard to the legal rights of the other, to the facts of the particular situation and to the interests of other States with established fishing rights in the area.For those reasons, the Court gave (Judgment, para. 79) the decision indicated above.